0210 B415F Profits tax - insurance

0210 B415F Profits tax - insurance - u 11 B415F Profits...

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Unformatted text preview: u 11 B415F Profits tax: Insurance business Insurance Companies n Profit and loss not regularly arise on an annual basis 1. Life insurance 2. Non life insurance 3. Reinsurance 4. Mutual life 5. Insurance agents 22 33 Assessable profits of insurance corporations n Special provisions under the IRO for insurance corporations, because of the nature of their business. n Assessable profits are computed for both life insurance and non-life insurance corporations n Expenditures of the insurance business are contingent , i.e. dependent on the occurrence of certain events and, hence, cannot be computed with certainty . 1. Life Insurance n Life n Annuity an investment or insurance policy that pays someone a fixed sum of money each year. n Birth 44 55 Insurance business Life Insurance S23 provides 2 alternative methods for the computation of assessable profits of such companies. These are either: a) 5% of premiums from life insurance business in HK during the basis period (s23(1)(a)); or a) Adjusted Surplus 66 a) 5% method n Premiums from life insurance business in HK include: All premiums received or receivable in HK whether from residents or non- residents; and All premiums, received or receivable elsewhere, from HK residents where the premiums are in respect of policies, the proposals for which were received by the corporation in HK 77 a) 5% method n Returned premiums or reinsurance premiums are deductible before applying the 5% method (s23(9)) n If the 5% rule is used, there will be no adjustment for depreciation allowance b) Adjusted surplus method { 0 1 6 B 9 A 1 -9 C 1 C -4 6 A -9 4 2 1 -B 0 8 E 1 F 6 F A 8 F 7 } Assessable profit or loss { A 9 5 2 A 1 8 -E A 2 8 -4 2 0 6 -A 1 0 A -0 3 5 3 F 0 E D 6 1 } Adjusted surplus or loss { C B C 0 9 F 5 0 -6 D F E -4 E 5 -B 6 1 B -B D 3 1 3 A 9 8 2 8 3 A } HK premium/ worldwide premium { 4 4 3 D 1 7 8 -4 0 B-4 9 A C -B 6 2 F -3 5 A F 7 F 5 4 7 1 C } Yearly premiums / total premiums for the repo 88 99 b) Life Insurance Adjusted Surplus n The election is irrevocable and the method applies to all future years of assessment (s23(1)(b)) n An election is valid only if the company submits a certified true copy of the actuarial report to the CIR no later than 2 years after the end of the period in respect of which it is made (s23(3)) 1010 Adjusted surplus method n If the company so elects, that part of the adjusted surplus ascertained in accordance with s23 n Adjusted surplus is the surplus by which the life insurance fund exceeds the estimated liability of the company on the...
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0210 B415F Profits tax - insurance - u 11 B415F Profits...

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