Hong Kong: Passage of Inland Revenue (Amendment) (Profits Tax Concessions for Insurance-related Businesses) Bill 2019 by Legislative Council

The Inland Revenue (Amendment) (Profits Tax Concessions for Insurance-related Businesses) Bill 2019 has been passed by the Legislative Council on 15 July 2020. 

The new Ordinance seeks to amend the Inland Revenue Ordinance (Cap. 112) to reduce the profits tax rate by 50% (i.e. tax rate at 8.25%) for all general reinsurance business of direct insurers, selected general insurance business of direct insurers and selected insurance brokerage business. Some global financial centers are lowering corporate tax rates. The passage of this Ordinance can promptly enhance the competitiveness of insurance industry in Hong Kong and make the tax rates of Hong Kong roughly comparable to those of Singapore. 

The new Ordinance would promote the development of the marine and specialty risk insurance businesses of Hong Kong and enhance the development of high value-added maritime services. The new Ordinance would also assist the insurance industry to seize new opportunities, including those arising from the Belt and Road Initiative.

The 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 target is to give effect to the aforementioned tax concessions by the end of 2020 or early 2021.

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