Ministry of Finance and State Administration of Taxation, Circular on Issues Relevant to Deduction Before Income Tax of Payments to the Insurance Security Fund by Insurance Companies

Issued: September 17 2005
Effective: January 1 2005

Main contents: Pre-tax deduction is permitted according to actual circumstances where insurance companies make payments to the insurance security fund in accordance with the following:
(1) for property insurance, accident insurance and short-term health insurance businesses, not exceeding 1% of retained premiums;
(2) for guaranteed rate long-term life insurance and long-term health insurance, not exceeding 0.15% of retained premiums;
(3) for non-guaranteed rate long-term life insurance and long-term health insurance, not exceeding 0.05% of retained premiums; and
(4) other insurance businesses, not exceeding the proportion as provided by the China Insurance Regulatory Commission (Article 1).
Pre-tax deduction for payment to the insurance security fund by insurance companies is not permitted under any of the following circumstances:
(1) the balance of the payment to the insurance security fund of property insurance companies, comprehensive reinsurance companies and property reinsurance companies amounts to 6% of the company's total assets; or
(2) balance of the payment to the insurance security fund of life insurance companies, health insurance companies and life reinsurance companies amounts to 1% of the company's total assets (Article 2).
Related legislation: Administration of the Insurance Security Fund Procedures, Dec 30 2004

Repealed legislation: The second paragraph of Article 12 of the State Administration of Taxation, Circular on Several Issues Concerning Income Tax of Financial and Insurance Enterprises, 2000