Hong Kong insurance legislator Chan Pui Leung: The rumors about taxation on overseas insurance policies are related to the implementation of CRS, and no official documents have been seen yet.

In response to recent rumors regarding the "20% personal income tax on overseas insurance policy gains imposed by the mainland," Hong Kong Legislative Council member Chen Peiliang, who represents the insurance sector, stated in reply to inquiries from the First Financial News that the discussions mainly relate to the tax "common reporting standard" and arrangements for declaring personal overseas income. As of now, no formal policy documents or implementation details have been published by the relevant authorities, and the related information has come from news reports. Chen pointed out that the requirement for Chinese residents to declare and pay taxes on overseas investment income has always existed, covering all overseas investment income and not specifically targeting insurance products. The recent heated discussions in the market have arisen because certain regions in the mainland have begun to implement the relevant standards. In his view, even if tax arrangements are adjusted in the future, it may have a short-term impact on the Hong Kong insurance industry, but in the long run, it may not be a bad thing for the industry. The deepening implementation of the CRS combined with transparency in cross-border capital management could foster a more regulated closed-loop capital channelcapital flowing out for insurance, and returning in an orderly fashion upon maturity. He also mentioned the profit margins on Hong Kong insurance policies: currently, the yield on Hong Kong savings-type insurance is around 6% to 6.5%, compared to about 3% for similar products in the mainland. Even after accounting for taxes, Hong Kong policies still enjoy nearly a two percentage point net yield advantage, and he believes this will not significantly reduce the willingness of mainland visitors to purchase insurance in Hong Kong. He believes that Hong Kong's insurance products are flexible in design and allow for diversified currency allocation, making them competitive in wealth inheritance and planning. Chen also stated that there is currently no need to raise any inquiries regarding this matter in the Legislative Council.