The State Council issued an order (Order No. 720) to expand the availability of the financial industry to foreign insurance companies and foreign-funded banks.
From a tax perspective, areas of complications and uncertainties continue.
Highlights of changes under the new foreign insurance companies regulation:
Highlights of changes under the new foreign banks regulation:
The new guideline focuses on market access, business scope (including operation requirements), and regulatory procedures of foreign banks and insurance companies. It removed restrictions upon shareholder’s total asset, type, overseas operation experience, etc., expanded business scope of foreign banks, and greatly accelerated the opening-up of banking and insurance industry—all of which aimed to attract more foreign financial institutions to invest in China.
However, the regulatory and tax environment remains complicated during the opening-up. From regulatory perspective, RMB license approval has been removed, but foreign banks still need to comply with the prudential requirements stipulated by the banking regulatory department of the State Council. Meanwhile, interest-bearing asset percentage of foreign bank branches is still subject to further confirmation from the regulator. In this regard, the market entry level for foreign financial institutions is lower while foreign financial institutions may face a stricter regulatory environment during the business operation in China.
From a tax perspective, areas of complications and uncertainties still exist, including:
For more information contact a KPMG tax professional:
David Ling | +1 609 874 4381 | email@example.com
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.