Page 53 - India Insurance Report 2023- BIMTECH

India Insurance Report - Series II 41

undersubscribed surplus, capacity may be accepted from offshore reinsurers. There should be Contract
certainty for the conclusion of the R/I agreement. OR

B) Removed

The offshore reinsurers could be transacted simultaneously with collaterals to restore parity with
foreign reinsurance branches in India.

3.2.4. Branch Offices of Foreign Reinsurers

The Branch offices of foreign reinsurers should have a simple regulatory regime drawn up, which
does not burden them with (illustrative but not exhaustive): a) Retrocession limits, b) Local solvency
rules if they have already complied with economic risk-based capital and solvency norms under EU
wide Solvency II regime or equivalent of that; c) Quarterly actuarial filings; d) Public Disclosures;
Mandatory investments in the local markets; e) General caveat that such Branches would be subjected to
the entire Insurance Act provisions. The Branch offices of foreign reinsurers should be allowed to seek
comfort around the entire balance sheet of the parent, its rating, solvency and its global market conduct.

3.3.Reinsurance Taxation

Taxation rates and concessions for the Reinsurance sector in the Asia region are provided in the
table below. Once the entities are granted with the tax incentive status (normally for a period of 10
years), they will be concessionary taxed.

Location Corporate Tax Rate Tax Incentive Rate for Reinsurance
Australia 30.0% NIL

China 25.0% NIL
Hong Kong 16.5% 8.25%
Japan 23.2% NIL
Korea 11.0%/ 22%/ 24.2% NIL

Malaysia 24.0% 8.00%
Singapore 17.0% 10.00%
India 22% 40% for Foreign Reinsurance Branches
(having an underwriting branch office in India)

To make India a Reinsurance hub and to give incentives to Foreign Reinsurance branches (FRBs) for
the Reinsurance Underwriting Activities from offshore business (Non-Indian/Global) from FRBs India
office, it is recommended that a new lower taxation rate “Reinsurance Export Services (RES)” tax rate of
10% should be introduced which will be lower than the current taxation rate of 40% for FRBs and Lloyd’s.
This rate will be competitive with Taxation rates present for Reinsurance activities in Asian countries like