Hong Kong Plugs Captive Insurance To Mainland Companies
by Mary Swire, Lowtax.net, Hong Kong
07 August, 2014
The Permanent Secretary for Financial Services and the Treasury, Au King-chi, outlined Hong Kong's plans to promote captive insurance for Mainland Chinese companies, at a seminar held in Beijing on August 5.
Au said that, as "financial co-operation between Hong Kong and the Mainland has all along been implemented in accordance with the 'mutually beneficial' principle, Hong Kong's Government hopes to encourage more [Mainland enterprises] to leverage the city's advantages, such as by setting up captive insurers in order to enhance their risk management."
"On one hand, Mainland enterprises can access world-class risk management services for their offshore business by forming captive insurers in Hong Kong. On the other hand, Hong Kong's insurance market will be broadened, achieving a mutually beneficial result."
"As many Mainland enterprises are already conducting their financial activities in Hong Kong, there will be synergy if they also set up their captive insurers in Hong Kong," she continued. "Being proximate to the Mainland and sharing the same culture and language, Hong Kong is better placed than other financial centers in the region to be a domicile for captive insurers formed by Mainland enterprises."
It has also been noted that the development of captive insurance would not only reinforce Hong Kong's status as a regional insurance hub, but also diversify Hong Kong's risk management services, and promote the development of other related professional services including reinsurance, accounting, actuarial, and legal services.
The Chinese Government has already announced a policy to encourage Mainland enterprises to form captive insurers in Hong Kong, while Hong Kong's Government has amended the tax code to cut profits tax on the offshore business of captive insurers in half from April 1, 2013, to 8.25 percent – equivalent to that paid by reinsurance companies. The Legislative Council passed the amendment in March this year.
Also speaking at the seminar, the Acting Assistant Commissioner of Insurance (Policy and Development), Tony Chan, pointed out that "the application process for authorization of a captive insurer can be completed within three months provided that all the necessary documents are submitted."
See all of today's news