The Effect of Technical Provisions on the Tax Burden of Insurance Companies in Palestine

Abstract

This study aimed to identify the effects of technical provisions on the tax burden of the insurance companies listed on the Palestine Stock Exchange. The study is based on the descriptive method. The data of the insurance companies operating in Palestine were collected from the Palestinian Capital Market Authority between 2012-2021. The linear regression model was used to test the study's hypotheses. The study found several results, the most important of which was that insurance companies benefit from technical provisions to reduce their tax burden, and that there is an impact of technical provisions (Provision for compensation under settlement, provision for applicable notice) on tax burden (Income Tax, Value Added Tax) in insurance companies in Palestine. One of the most important recommendations is to review the composition of technical allowances in insurance companies operating in Palestine to increase by the volume of written premiums rather than by the passage of time, and to increase oversight by income tax offices of insurance companies regarding the methods of calculating technical allowances. In addition, this study recommends to continue to strengthen technical precautions as well as technical controls over underwriting.