Tax incentives for HK Insurance market
First proposed in December last year, the Hong Kong Legislative Council has now passed a measure that will reduce profits tax on several insurance businesses.
To date, tax incentives in the Hong Kong insurance sector have been offered only to captive insurers and professional reinsurers. Aiming to further promote Hong Kong as a global insurance hub, the new bill is intended to (a) ensure that Hong Kong insurers are operating on a level playing field with those based in other jurisdictions and also (b) attract more insurers to Hong Kong.
The Inland Revenue (Amendment) (Profits Tax Concessions for Insurance-related Businesses) Bill 2019 was passed on 15 July 2020. Once in effect, the law will institute a tax rate of 8.25%, cutting by half the profits tax rate for all general reinsurance business of direct insurers, selected general insurance business of direct insurers, as well as selected insurance broking businesses.
The Secretary for Financial Services and the Treasury of Hong Kong said that the new ordinance will “promote the development of the marine and specialty risk insurance businesses of Hong Kong and enhance the development of high value-added maritime services.” It is also designed to help the insurance industry capitalise on opportunities arising from projects such as the development of the Greater Bay Area and the Belt and Road Initiative.
The government aims to implement the aforementioned tax concessions by the end of 2020 or early 2021.