Insurance chief rejects tax loophole claimBusiness | Tereza Cai 10 Sep 2019
The Insurance Authority has clarified that its aim in introducing the qualified tax-deductible annuity product is to help relieve Hongkongers' retirement pressure, pointing out that the few providers using the tax-deductibility as a selling point deviated from the basic purpose of the product.
Insurance Authority chief executive Clement Cheung rejected rumors that the watchdog halted a QDAP - Qualifying Deferred Annuity Policy - from BOC Life.
It was claimed the policy leveraged on a regulatory loophole to help investors evade tax - ending the insurance policy to get a refund of the principal after a five-year premium payment period, while enjoying the tax-deductible amount.
Cheung said the regulator had not received any complaints on that and said such a policy is not a violation of previous regulations.
The authority issued a fresh guideline in August to all such policy providers, reiterating the purpose of launching the product is to encourage citizens' voluntary long-term saving.
BOC Life, the life insurance arm of Bank of China (Hong Kong) (2388), then prolonged the break-even period of the controversial policy from five years to eightyears, while the payment period is still five years. Its spokesman said the move took heed of the market environment and the pre-set sales target being met.
"We do not encourage early surrender just for the sake of tax benefits," said BOC Life. "QDAP is for long-term retirement protection."
Meanwhile, the association said new applicants for licensed insurance agents or brokers from September 23 are required to have achieved level two in the Hong Kong Diploma of Secondary Education Examination, while the responsible officers must have a bachelor degree.
Insurance workers who already have a licence from the three designated institutions could apply for the new license from the authority within three years from September 23, without the new academic requirements.