Hong Kong insurers' shares slump on report China to tax offshore insurance income
Chinese mainland tax authorities have reportedly started levying personal income tax on returns from offshore insurance policies, the latest sign of greater scrutiny of offshore investments.
The logo of British life insurer Prudential is seen on their building in London on Mar 17, 2019. (Photo: Reuters/Simon Dawson)
BEIJING: Hong Kong-listed shares of major insurers, led by Prudential and AIA Group, fell sharply on Thursday (Aug 6) after Caixin reported China's mainland tax authorities are levying taxes on insurance policy income earned offshore.
Beijing and Hangzhou authorities have started to apply personal income tax rates of 20 per cent on returns from Hong Kong insurance policies, including dividend payouts and interest earned on prepaid premiums, Caixin reported on Wednesday.
The move was seen by analysts as a potential sharpening of China's increased scrutiny of offshore investments.
China's finance ministry and the National Financial Regulatory Administration have not responded to Reuters' requests for comment.
AIA shares slid 8.2 per cent, Prudential fell more than 5 per cent, and Hong Kong-based insurer FWD Group was down 4.5 per cent, dragging Hong Kong's Hang Seng Index more than 2 per cent lower in early trading on Thursday.
Hong Kong insurance has long been a channel for Chinese investors buying assets abroad, with the policies providing more protection than what is available on the mainland, and related savings and investment products mostly denominated in dollars.
A drop in domestic bond yields dragged down onshore insurance returns, which further fuelled demand for offshore products in recent years.
Chinese insurers Ping An Insurance and China Life Insurance were down more than 1 per cent as both firms have a sizeable offshore business with Hong Kong assets.
HSBC's Hong Kong-listed shares fell 2.2 per cent and Standard Chartered was down 1 per cent. Both have large insurance units.
The overseas-based insurers earn a major share of their business from mainland Chinese customers, and the tax news sparked fears sales of insurance policies and other financial products could slow.
Hong Kong was Prudential's largest profit contributor in 2025. In its annual results in March, it attributed its 12 per cent growth in new business profit in the financial hub to sales growth across both domestic customers and visitors from China.
Prudential's London-listed shares fell by as much as 13 per cent on Wednesday.
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Jefferies said the Caixin report had sparked "investor panic" in Prudential shares.
Analysts at the US bank said the move would reduce the appeal of Hong Kong insurance products relative to domestic ones, but could also ease fears that Beijing may eventually ban offshore insurance sales outright.
Caixin said the tax collection drive has been made possible by data sharing under the Common Reporting Standard, which allows mainland authorities to track overseas policy details, adding that enforcement was expected to tighten further.
