The Hong Kong Federation of Insurers responds to rumors regarding taxation on overseas policy returns: No formal policy document has been released, and the Hong Kong insurance market remains competitive.

In response to the recent market discussion regarding the rumor that "the mainland will impose a 20% individual income tax on overseas policy returns," the Hong Kong Federation of Insurers (HKFI) made a statement to the media today (August 7). The HKFI stated that as of now, the relevant departments have not issued any formal policy documents or implementation rules, and the HKFI is continuously monitoring and closely following related developments. Therefore, regarding the discussions and rumors, the HKFI will not make speculations or comments at this time. In the response, the HKFI emphasized that the demand from clients for protection, wealth inheritance, and asset allocation remains strong. As an international financial center, Hong Kong offers advantages in insurance products, including flexible product design, multi-currency allocation, wealth inheritance planning, and professional services. The HKFI believes that for clients with relevant needs, the overall Hong Kong insurance market still has appeal and competitiveness. It has been reported that recent media coverage indicates that tax authorities in cities such as Beijing and Hangzhou have begun to impose a 20% individual income tax rate on returns from overseas policies (especially Hong Kong policies), including dividends and prepaid premium interest. The "20%" is not a newly established tax rate but is aligned with how existing items such as "interest, dividends, and bonuses" are treated. In the past, due to the lack of transparency in cross-border information, there has been considerable leeway in the actual tax collection of overseas policy returns; however, with the establishment of the Common Reporting Standard (CRS), mainland China can exchange information on cash value policies through jurisdictions like Hong Kong, gradually narrowing the gaps in tax collection. According to Chinese individual income tax law, individual taxpayers who are residents of China must pay individual income tax on their global income. The Hong Kong Insurance Authority also emphasized in its response that the requirement for Chinese residents to declare and pay taxes on overseas investment income has always existed, and there is no need for the market to overinterpret this matter.