Mainland Imposes 20% Tax on Overseas Insurance Gains, Cooling Hong Kong Sales

Mainland China has begun levying a 20% tax on residents' overseas insurance policy gains. In response, some consumers are reassessing the cost-effectiveness of buying insurance in Hong Kong. Several Hong Kong insurance agents reported receiving numerous client inquiries about the tax in recent days, with market enthusiasm cooling. A broker with years of experience in Hong Kong said their recent policy issuance has declined, and if the market continues to cool, they would consider shifting to the Singapore market.

A relevant department head at the State Taxation Administration previously stated that under the current Individual Income Tax Law, Chinese tax residents must fulfil tax obligations on global income, and overseas insurance gains also fall within the scope of taxable income. The official stressed that this is not a new policy, nor is it specifically aimed at Hong Kong's insurance market, and the public need not over-interpret the move.