Regulatory disclosures
Product reference information
Reference information about Universal Life, Participating products and Medical insurance products
Hong Kong
Macau
Common Reporting Standard
The Common Reporting Standard (CRS) was developed by the Organisation for Economic Co-operation and Development (OECD) and endorsed by the G20 Finance Ministers as the international standard for the automatic exchange of financial account information to enhance tax transparency and improve tax compliance.
The relevant legislation in Hong Kong came into effect in June 2016. Effective 1 January 2017, all financial institutions, including Prudential Hong Kong Limited, are required to perform due diligence on all customers, relevant account holders will have to provide self-certifications on their tax residency status.
If you would like to know more about your tax residency and CRS, you are advised to visit the IRD and OECD websites or contact your tax advisor.
What is the CRS?
The Common Reporting Standard (CRS), is an international standard developed by the Organisation for Economic Co-operation and Development (OECD), designed to enhance tax transparency and improve tax compliance through a global automatic exchange of financial information between CRS-participating jurisdictions.
What is AEOI?
The Automatic Exchange of Financial Account Information (AEOI) is a new system that involves the transmission of financial account information (policy information if it is life insurance) from Hong Kong to an overseas tax jurisdiction with which Hong Kong has entered into an AEOI agreement (or known as an “AEOI partner”).
Who will be the reportable persons?
Under CRS, all financial institutions, including Prudential Hong Kong Limited, are required to identify customers who appear to have tax residency outside of Hong Kong, and report certain policy information to the Inland Revenue Department (IRD) of Hong Kong. IRD may then share the information with the tax authority where the customer is a tax resident.
Who is doing this?
In Hong Kong, all financial institutions, including Prudential Hong Kong Limited, are legally required to be compliant with the CRS.
When are you doing this?
Beginning 1 January 2017, Prudential will start to collect relevant information from account holders (for most of the cases in life insurance policy, it’s the policyholders, collateral assignee and beneficiary) for the purpose of AEOI.
What information are you asking customers to provide?
Under CRS, we will be asking you for your name, Hong Kong identity card or passport number, address, date and place of birth, jurisdiction of residence, tax identification number, controlling person type (for business insurance if proposer/policyholder is an entity with one or more controlling person(s)), place of registration/incorporation, Hong Kong Business Registration Number, and entity type (for business insurance if proposer/policyholder is an entity).
How do I know my tax residency?
Generally, your tax residency is the jurisdiction where you are resident for tax purposes. Please contact a professional tax adviser or check the OECD website for more information on how to determine your tax residency.
What is a self-certification?
This is a formal declaration that account holder (for most of the cases in life insurance policy, it’s the policyholders, collateral assignee and beneficiary) makes in connection with his/her tax residency.
Which countries or regions are participating in the CRS?
As at 26 July 2016, more than 100 jurisdictions over the world have committed to the implementation of AEOI, you may check the list on OECD website.
IA Levy
From 1 January 2018 onwards, a levy on insurance premiums for insurance policies will be payable to the Insurance Authority ("IA") by policyowners under Insurance (Levy) Order and Insurance (Levy) Regulation.
Levy is a specific percentage to the premium payable with a levy cap applied per policy per policy year. The levy will be collected from policyowners through insurance companies. Details of levy can be referred to table below. For further information, please click here.
As policyowner must pay levy when premium is paid, the levy will be collected when the premium is paid and then remit to Insurance Authority as required by the law. If policyowner does not pay the overdue levy timely, IA may, according to the law, impose on the policyholder a penalty of up to HK$5,000, and may recover the outstanding levy as a civil debt due to the IA.
Policy inception date* and the policy anniversary date thereafter |
Applicable levy rate |
General insurance policy ^ |
Long term life policy |
Cap per policy per policy Year (HK$) |
|||
From 1 Jan 2018 till 31 March 2019
|
0.040% |
2,000 |
40 |
From 1 Apr 2019 till 31 March 2020
|
0.060% |
3,000 |
6060 |
From 1 Apr 2020 till 31 March 2021
|
0.085% |
4,250 |
85 |
From 1 Apr 2021 onwards(date inclusive) |
0.100% |
5,000 |
100 |
*For life insurance, it is the Commencing Date in the Certificate of Life Assurance. |
|||
^ The levy rate is determined by the date which the first premium becomes payable i.e. the date when policy becomes effective (For non-annual travel cover, since the cover under some sections is effective after the Certificate of Insurance is issued, the policy effective date will be the date of issuance of the Certificate of Insurance.) or by reference to the policy anniversary date (whichever is applicable).
What is levy?
From 1 January 2018 onwards, a levy on insurance premiums for insurance policies will be payable to the Insurance Authority by policyowners via insurance company under Insurance (Levy) Order and Insurance (Levy) Regulation in order to support the operational cost of IA. Levy is calculated based on the levy rate on the premium payable per policy. There is a levy cap per policy per policy year.
When will the levy become effective?
New business:
Any policies with policy inception date (which is the Commencing Date in the Certificate of Life Assurance) on or after 1 Jan 2018 are subject to levy.
In force policy:
For all in force and premium paying policies, first levy is payable for the policy when it reaches its anniversary date in 2018.
When do I need to pay levy?
Levy has to be paid when the premium is paid. Policyowner must pay levy together with premium.
What will be the consequences if I do not pay levy on time?
If policyowner does not pay the overdue levy timely, the Insurance Authority (“IA”) may, according to the law, impose on the policyholder a penalty of up to HK$5,000, and may recover the outstanding levy as a civil debt due to the IA.
How can I know the levy amount I need to pay? Will Prudential issue levy payment notice to me separately?
Premium Notice, Premium Reminder and Overdue Notice will list out the total sum of premium and levy payable to facilitate policyowner to arrange payment. myPrudential will be enhanced to show the total payable (including premium and levy payable) to ease policyowner reference. And Policy Anniversary Statement will display the premium and levy amount separately.
If I don’t want to pay the levy through Prudential, can I pay to IA directly?
Cannot. Under Insurance (Levy) Order and Insurance (Levy) Regulation, policyowner have to pay levy to Insurance Authority via insurance company.
I have set a withdrawal limit on my autopay of insurance policy payment, what should I do for the implementation of levy?
You may request to reset the withdrawal limit with the bank, change autopay account, or change payment method for for future premium and levy.
If I pay premium via overseas credit card, do I need to pay the administration fee for levy?
Levy is subject to administrative fee if you use overseas credit card for premium and levy.
Any impact on my policy coverage and return after the implementation of levy?
Levy will not affect your insurance coverage or return.
Will my policy be terminated If I didn’t pay the levy?
Implementation of levy does not affect the continuity of insurance coverage. If you pay premium only without levy, policy will not be terminated. However, if policyowner does not pay the overdue levy timely, the Insurance Authority (“IA”) may, according to the law, impose on the policyholder a penalty of up to HK$5,000, and may recover the outstanding levy as a civil debt due to the IA.
Can I apply for addition of benefits / policy changes if I do not pay levy? These changes may affect the premium amount, will levy be adjusted correspondingly? And do I need to pay the levy difference to complete the application?
If the policy change request incurs a premium adjustment, the difference in premium will be subject to levy. Furthermore, the policy change request will only be completed upon settlement of all outstanding levy, if any.
Will Prudential deduct the levy from Automatic Premium Loan ("APL") in case my policy is now paying by APL? If yes, any loan interest incurred on levy part?
Prudential shall deduct levy by Automatic Premium Loan ("APL") if any renewal premium of the policy is being paid by APL and such levy shall be part of APL on which interest shall be charged in accordance with the policy provisions. However, if the cash value of the policy is insufficient to settle both premium and levy, only premium will be deducted by APL. You have to settle all levies separately.
Can I deposit a certain amount of money to my Premium Deposit Account for future levy?
No. According to the law, policyowner must pay levy when premium is paid, therefore, policyholder is not able to pay levy in advance, except that advance levy is paid together with the advance premium.