The Executive Yuan today passed a draft amendment to the Offshore Banking Act that would allow Taiwanese insurance companies to set up offshore insurance units (OIUs) inside ROC territory, a move that is expected to give the domestic insurance industry a major leg up in the international arena.
If passed by the Legislature, the revised law would open up new insurance business opportunities and make Taiwan's financial services more comprehensive. Premier Jiang Yi-huah said the amendment matches up with the government's core concepts of creating a liberalized, internationalized and forward-thinking business environment.
Drafted by the Financial Supervisory Commission (FSC) and the Central Bank of the ROC, the draft amendment contains several key points:
1. The scope of offshore financial activities promoted by the act will be expanded to include the insurance business. (Articles 1 and 2)
2. Offshore units of securities companies will be free from the restrictions of the Trust Enterprise Act, the Securities Investment Trust and Consulting Act, and the Futures Trading Act. (Article 22-6)
3. The amendment stipulates the types of insurance companies qualified to set up branches for conducting offshore insurance business. It also specifies the lines of insurance that are permitted and requires the operating entity to be organized as a branch. The branch should allocate working capital for its operations, and the minimum amount of such capital will be set by the FSC. (Article 22-12)
4. The scope of insurance businesses that OIUs may engage in includes insurance and reinsurance policies denominated in foreign currencies, and other related businesses approved by the governing authority. (Article 22-13)
5. An OIU may designate another branch to handle its business activities, and the designated branch may be required to pay tax on fees charged to the OIU for handling those activities. (Article 22-14)
6. OIUs conducting offshore insurance business will not be subject to the relevant restrictions of the Foreign Exchange Control Act and the Insurance Act. The governing authority will set regulations for the OIUs concerning finances, businesses, utilization of funds, risk management, inspection by authorities, and other matters of compliance. (Article 22-15)
7. OIUs will be able to enjoy various tax breaks, subject to certain conditions and timeframes. (Article 22-16)
8. Fines will be assessed against OIUs that operate outside the approved scope of business, fail to provide business or financial reports as required, or refuse to comply with official inspections. (Articles 22-18 through 22-20)