Hong Kong Tax News Flash

Apr 2023, Issue 6

Bill on taxation of insurers upon implementation of Risk-based Capital regime

The Insurance (Amendment) Bill 2023 (Bill) was gazetted on 6 April 2023. The Bill seeks to amend the Insurance Ordinance (Cap. 41) (IO) to provide a legal framework for the implementation of a Risk-based Capital (RBC) regime for the Hong Kong SAR insurance industry. It is envisaged that as adopting the RBC regime may potentially create a one-off taxable transitional adjustment to insurers, the Bill seeks to amend the relevant sections of the Inland Revenue Ordinance (IRO) to provide a legal basis for the one-off transitional adjustment to be assessed over a period of five years. The Bill also proposes amendments which could change the taxation basis of certain insurance business.

This news flash summarises the key observations on the proposed amendments to the IRO.