Insurance Profits Tax To Be Enhanced

The Government today gazetted subsidiary legislation to implement the new profits tax concessions for insurance-related businesses on March 19, 2021.

Enacted in July 2020, the Inland Revenue (Amendment) (Profits Tax Concessions for Insurance-related Businesses) Ordinance 2020 reduces the profits tax rate by half to 8.25% for all general reinsurance business of direct insurers, selected general insurance business of direct insurers and selected insurance brokerage business.

One of two pieces of subsidiary legislation is the Inland Revenue (Amendment) (Profits Tax Concessions for Insurance-related Businesses) Ordinance 2020 (Commencement) Notice.

It appoints March 19, 2021, as the date on which the Inland Revenue (Amendment) (Profits Tax Concessions for Insurance-related Businesses) Ordinance 2020 will become effective. 

The other subsidiary legislation is the Inland Revenue (Profits Tax Concessions for Insurance-related Businesses) (Threshold Requirements) Notice. 

It prescribes threshold requirements for determining whether the relevant activities of the specified insurance-related business are, or are arranged to be, conducted in Hong Kong.

The Financial Services & the Treasury Bureau said the profits tax concessions will promote the development of marine and specialty insurance businesses of Hong Kong. 

They will also enhance the competitiveness of the insurance industry in seizing new opportunities, including those arising from the Belt & Road initiative, it added.

The two pieces of subsidiary legislation will be tabled before the Legislative Council for negative vetting on January 20.