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Effect of tax deductibility on technical reserves recognized by Czech and Slovak insurance companies
[Vliv daňové uznatelnosti na výši technických rezerv tvořených českými a slovenskými pojišťovnami]

Author

Listed:
  • Jan Hájek

Abstract

The paper describes the influence of a tax law on the technical reserves recorded by the Czech and Slovak insurance companies. Specifically using technical reserves to insurance payments respectively to liabilities ratio it verifies whether the rules covered by the respective tax law might have influence the values of the technical reserves created. The Czech and Slovak insurance companies were chosen due to their different tax regime for the whole analyzed period (2010 - 2018). Whereas the Slovakia linked the amount of tax deductible technical reserves to the Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009, the Czech tax law allowed to deduct from the corporate income tax base any value reasonably justifiable. The results of the statistical analysis indicate influence of the tax regime of the technical reserves deductibility as the Czech insurance companies were achieving significantly higher values of the technical reserves to insurance payment ratio in comparison to the Slovak insurance companies where the tax regime had been stricter.

Suggested Citation

  • Jan Hájek, 2020. "Effect of tax deductibility on technical reserves recognized by Czech and Slovak insurance companies [Vliv daňové uznatelnosti na výši technických rezerv tvořených českými a slovenskými pojišťovnam," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2020(3-4), pages 25-37.
    • Handle: RePEc:prg:jnlcfu:v:2020:y:2020:i:3-4:id:548:p:25-37
    DOI: 10.18267/j.cfuc.548
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    References listed on IDEAS

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    1. Cristina Mihaela Nagy & Dumitru Cotleț, 2011. "Specific Aspects of the Technical Reserves of Insurance Accounting," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 11(1), pages 171-178.
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    3. Abdul Latif Alhassan, 2018. "Loss reserving behaviour in insurance markets: Evidence from Mauritius," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 39(7), pages 805-813, October.
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    5. England, P.D. & Verrall, R.J. & Wüthrich, M.V., 2019. "On the lifetime and one-year views of reserve risk, with application to IFRS 17 and Solvency II risk margins," Insurance: Mathematics and Economics, Elsevier, vol. 85(C), pages 74-88.
    6. Niclas Hellman, 2008. "Accounting Conservatism under IFRS," Accounting in Europe, Taylor & Francis Journals, vol. 5(2), pages 71-100, December.
    7. Shinichi Kamiya & Andreas Milidonis, 2018. "Actuarial Independence and Managerial Discretion," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 85(4), pages 1055-1082, December.
    8. Gaganis, Chrysovalantis & Hasan, Iftekhar & Pasiouras, Fotios, 2016. "Regulations, institutions and income smoothing by managing technical reserves: International evidence from the insurance industry," Omega, Elsevier, vol. 59(PA), pages 113-129.
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    More about this item

    Keywords

    Technical reserves; Corporate income tax; Czech Republic; Slovakia; Technické rezervy; Daň z příjmů právnických osob; Česká republika; Slovensko;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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