The Hong Kong Legislative Council has passed a measure that will reduce profits tax on several insurance businesses, a move that seeks to grow the insurance sector by stimulating investment.
The Inland Revenue (Amendment) (Profits Tax Concessions for Insurance-related Businesses) Bill 2019 was passed by the lawmaking body on July 15. 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.
In a statement, Christopher Hui, Secretary for Financial Services and the Treasury of Hong Kong SAR, welcomed the passage of the bill.
According to Hui, 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 will also help the insurance industry seize new opportunities, such as those coming from Beijing’s Belt and Road Initiative.
Hui also announced that the HK government and the Insurance Authority will proceed with the next stage of preparatory work, including formulation of implementation details and drafting of subsidiary legislation. The government aims to implement the aforementioned tax concessions by the end of 2020 or early 2021.
