The law has always mandated that residents of the Chinese mainland report and pay taxes on income generated from offshore investments, according to the Hong Kong Insurance Authority. This clarification comes amid concerns that some mainlanders were being asked to pay individual income tax on earnings from Hong Kong insurance policies.
The authority advised that there’s no need to read too much into or speculate about this issue, emphasizing that the regulation regarding taxation on offshore investment income has been in place for some time.
Recent reports indicate that tax authorities in cities like Beijing and Hangzhou have started imposing a 20 percent personal income tax on dividends and interest from prepaid premiums associated with Hong Kong insurance policies.
Executives from family offices and tax attorneys interviewed by this publication stated that none of their clients had received notices to pay such taxes on Hong Kong insurance income. They confirmed that the taxation is legally supported and aligns with what was expected. Some legal professionals also mentioned having handled similar cases in the past.
The Hong Kong government and the Insurance Authority are actively monitoring the evolving mainland tax policies on financial products and are maintaining ongoing dialogue with industry stakeholders.
Tax regulations in China stipulate that residents must report income both domestically and from abroad, including earnings from interests, dividends, bonuses, property leasing, property transfers, and incidental income, all taxed at a flat rate of 20 percent. Offshore income is taxed separately from domestic income.
The authority highlighted the maturity of the Hong Kong insurance market, noting its flexible and sophisticated product offerings. These include options for different currencies, global asset allocation, life planning, and wealth transfer services—all of which are attractive to mainland clients.
In 2023, new premiums from mainland investors purchasing insurance in Hong Kong topped HKD 59 billion (approximately USD 7.6 billion), and this figure increased by 6.5 percent to HKD 62.8 billion (about USD 8.05 billion) in 2024. These premiums accounted for nearly 29 percent of the city’s total new business and approached the peak of HKD 72.7 billion set in 2016. The insurance authority stopped providing separate statistics for mainland visitors’ premiums last year.