We, The Hong Kong Federation of Insurers (“HKFI”), The Hong Kong Investment Funds Association (“HKIFA”), and The Hong Kong Trustees’ Association (“HKTA”), have formed a joint industry FATCA working group (the “Working Group”) in Hong Kong to share thoughts, provide education and work together to address concerns raised by financial institutions in Hong Kong with respect to FATCA. Hong Kong is a special administrative region of the People’s Republic of China. The Working Group liaises with regulatory bodies in Hong Kong to solicit comment on FATCA. The Working Group’s membership is extensive and further details on the members are outlined below.
The Working Group appreciates the opportunity to provide comments on the Proposed Regulations, and the attempt of the U.S. Department of Treasury (“Treasury”) and the U.S. Internal Revenue Service (“IRS”) to amend earlier guidelines and provide greater clarity through the Proposed Regulations. Through this submission, the Working Group wishes to provide some recommendations that we believe will lessen the burden of implementation, while still achieving the stated FATCA policy objectives.
Background
HKFI was established on 8 August 1988 and exists to promote insurance to the people of Hong Kong, as well as to build consumer confidence in the industry by encouraging the highest standards of ethics and professionalism amongst its members. It enjoys recognition by the Government of the Hong Kong Special Administrative Region (“Government of the HKSAR”) as the representative body of an important financial services industry in Hong Kong.
The insurance industry is one of the few industries in Hong Kong that enjoys a high
degree of self-regulation complemented by the Government of HKSAR's prudent regulatory framework. While maintaining a frequent dialogue with the Commissioner of Insurance of Hong Kong on legislative issues affecting the industry, the HKFI actively promotes and perfects its self-regulatory regime with the aim of improving the professionalism of and strengthening public confidence in the insurance industry.
Currently, the HKFI has 90 General Insurance Members and 43 Life Insurance Members. 62,334 agents are currently registered with member firms. They combine to contribute more than 90% of the gross premiums written in the Hong Kong market. The life insurance sector represented over 10% of the GDP of Hong Kong with more than US$20 billion in revenue in 2010.
HKIFA is the professional body that represents the asset management industry in Hong Kong. Established in 1986, the HKIFA has two major roles, namely consultation and education. On consultation, it acts as the representative and consulting body for its members and the fund management industry generally in all dealings concerning the regulation of unit trusts, mutual funds, retirement funds and other funds of a similar nature. Towards this end, it reviews, promotes, supports or opposes legislative and other measures affecting the fund management industry in Hong Kong. Another very important task is to educate the public about the role of investment funds in retirement planning and other aspects of personal financial planning.
As of April 2012, HKIFA has 49 fund management companies as full/overseas members, managing about 1,270 Hong Kong Securities and Futures Commission authorized funds. Assets under management amounted to about US$1,000 billion as at the end of March 2012. In addition, HKIFA has 68 affiliate and associate members.
HKTA was established in 1991 by members of the trust and fiduciary services industry to represent the trust industry in Hong Kong, particularly in the areas of legislation and education. Organized as a not-for-profit company incorporated in Hong Kong, the HKTA has more than 90 members. It represents thousands of professionals primarily working in the trust, private banking, fund services, legal and accounting covering all Mandatory Provident Fund (“MPF”) retirement plan trustees as well as corporate and individual trustees of Occupational Retirement Schemes Ordinance (“ORSO”) retirement plans. All 16 active MPF trustees and many ORSO trustees are members of the HKTA.
HKTA works closely with various stakeholders of the pension and regulated funds industries to advance development of the industries’ overall and to promote higher standards of professionalism and pension or fund governance. HKTA has been active in raising FATCA awareness on the part of retirement plan trustees and other financial market participants in Hong Kong as well as providing education and updates where appropriate.
The Working Group Submission
We note that the key objective of the Treasury and IRS in the implementation of FATCA is to establish a regime that meets the goal of preventing evasion of U.S. taxes. We understand and recognise this objective. However, it is critically important that the Treasury and IRS achieve this objective through a workable and economical framework for the industries which are affected, which above all else, is consistent with local legal and regulatory regimes. In this regard, we attach the following submissions as Appendices to this letter voicing our members' concerns in greater detail which we would encourage you to consider.
Appendix I – Hong Kong Retirement Plans
Appendix II – Hong Kong Investment Funds
Appendix III – Hong Kong Insurance Companies
Appendix IV – Private Trusts
1 comment:
Why foreign give extra. It's totally unbearable. If HK propose foreign account compliance act, i think it is bad for foreign.
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