The Hong Kong government has announced its intention to cut by half the tax on profits for captive insurers and to reduce the deduction ceiling for employee retirement scheme contributions.
The move is indicative of growing interest among Chinese and Asian firms in the captive concept. The proposed measure would grant captive insurers similar tax concessions as those currently enjoyed by regional reinsurance companies.
Commenting on the 2013-14 budget plan, secretary for financial services and the treasury, Professor K C Chan, said: "with a sound regulatory regime and a broad talent pool, Hong Kong is well positioned to establish itself as a center for captive insurance. Forming a cluster of captive insurers here will help the development of other related businesses, including reinsurance, legal and actuarial services."
China has sought to encourage the creation of a captive insurance hub in Hong Kong since the enactment of policy in July 2012 that has encouraged mainland Chinese firms to establish captive entities in Hong Kong. The new regulation forms part of a drive to establish the island as a hub for risk management.
Hong Kong, captive insurance, China, taxation