Captive Insurance

Reasons for Setting Up a Captive in Hong Kong

Sound regulatory framework - Hong Kong has an excellent regulatory regime and legal structure. It also possesses an international reputation with proper concern for business probity. Regulatory legislation is kept under regular review to bring it up to international standard.

Government support - The Government advocates and practises a regulatory policy characterized by the maxim "market leads and government facilitates". The Insurance Authority (regulator of the insurance industry) assumes a dual role both as the regulator and the facilitator of the industry.

Simple and low taxation - Hong Kong has a simple tax regime with a corporate profit tax rate as low as 17.5%, while the maximum rate of personal income tax is only 16%. These tax rates are among the lowest in the world. Tax in Hong Kong is levied on territorial source concept in that only profits arising in Hong Kong from a trade, profession or business carried on in the territory are taxable. Offshore income or income derived from investments outside Hong Kong are therefore not taxable in Hong Kong. In addition, unlike many other jurisdictions, Hong Kong has neither value added tax nor capital gains tax. Dividend and interest income from deposits with financial institutions are not subject to tax and there is generous capital allowance in respect of capital expenditure incurred for the purposes of producing chargeable profits.

Free flow of funds - Hong Kong has no control on foreign exchange or transfer of funds. Its currency is freely convertible in international markets.

Excellent banking services provided by banks of International status - As one of the top international financial centres, Hong Kong has attracted most of the top 100 banks in the world to set up branches here.

Investment services - Hong Kong is rated as one of the most open and transparent financial markets. Taking advantage of the favourable time zone location, the market of Hong Kong is able to have foreign exchange dealings 24 hours a day by linking to New York and London markets. Hong Kong has the second largest stock market in Asia in terms of market capitalization. Coupled with the rapidly growing debt market, Hong Kong has become the regional centre for investment portfolio management activities.

Accessibility to the reinsurance market - Hong Kong has a strong presence of international reinsurers. Most of the world's top 20 reinsurers have set up their branch offices in Hong Kong. They can be easily accessible for reinsurance protection as well as professional advice on risk management and related matters.

High quality accounting and legal services - Almost all internationally renowned accountancy firms and legal firms with a wide range of commercial experience have established their offices in the territory.

Convenient access to high quality captive management services - There are sufficient and first class captive management expertise available in Hong Kong. Depending on the market demand, such expertise could be enhanced readily.

Advanced telecommunications facilities - Telecommunications and postal facilities are available using the latest technology.

Social and political stability - A stable and responsible government is conducive to Hong Kong's social and political stability. This favourable attribute is enshrined in the Basic Law which provides that :

Proximity to the huge market of China - With its open-door policy and gradual deregulation of its insurance industry, China is expected to grow very fast economically over the next few decades. Hong Kong is strategically positioned to serve the insurance needs of your undertakings in this fast developing economy.