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:
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