Chapter 3-1 Insurance Enterprises
The following insurance enterprises may, through their head offices, apply to the competent authorities for a license to establish an offshore insurance branch within the ROC with independent accounting to conduct offshore insurance business:
1.Insurance enterprises approved by the FSC to engage in insurance business within the ROC.
2.Foreign insurance enterprises approved by the FSC to engage in insurance business within the ROC.
The term “insurance enterprises” referred to in the preceding paragraph shall mean non-life insurance enterprises, life insurance enterprises and professional reinsurance enterprises.
An offshore insurance branch established pursuant to paragraph 1 hereof shall allocate working capital for its operations. The minimum amount of the working capital shall be set by the FSC.
An offshore insurance branch may only conduct the following types of business:
1.The following types of foreign currency denominated insurance business:
(1) Personal insurance business where the applicant is a natural person, a juristic person, a government agency, or a financial institution outside the territory of the ROC and the insured is a natural person outside the territory of the ROC.
(2) Non-life insurance business where the applicant is a natural person, a juristic person, a government agency, or a financial institution outside the territory of the ROC and the subject matter insured is not a real property situated within the territory of the ROC.
2.Foreign currency denominated reinsurance business with insurance enterprises outside the territory of the ROC.
3.Other foreign currency denominated insurance-related businesses serving natural persons, juristic persons, government agencies, or financial institutions outside the territory of the ROC and approved by the competent authorities.
When an offshore insurance branch conducts the business mentioned in the preceding paragraph, it may not conduct concurrently non-life insurance and life insurance businesses, except where its head office is a non-life insurance enterprise that has been approved by the FSC to engage in injury insurance and health insurance.
An offshore insurance branch may designate the head office of the same insurance enterprise or a branch of the same foreign insurance enterprise established inside the territory of the ROC that has been authorized by the CBC to conduct insurance-related foreign exchange business (the "designated branch") to handle the business activities set out in paragraph 1 of the preceding Article. The business handled by the designated branch shall be booked on the account books of the offshore insurance branch.
The scope of business that the designated branch may handle includes cross-strait insurance business approved by the competent authorities in accordance with the Act Governing Relations between the People of the Taiwan Area and the Mainland Area. The control and supervision of such activities shall be handled in accordance with the regulations related to cross-strait insurance business. The offshore insurance branch shall coordinate and be responsible for such control and supervision.
If the designated branch charges the offshore insurance branch reasonable fees for handling any of the offshore insurance branch's activities to pay for its operating expenses, such revenue shall be booked as the designated branch's income and be duly subject to taxation. If the designated branch does not charge the offshore insurance branch any such fees, the expenses for handling the offshore insurance branch's businesses may not be booked as expenses.
Unless otherwise provided in this Act, the conducting of businesses specified under the subparagraphs of paragraph 1, Article 22-13 herein by an offshore insurance branch is not subject to the restrictions in relevant articles of the Foreign Exchange Control Act and the Insurance Act.
The FSC, in consultation with the CBC, shall adopt regulations for the business of offshore insurance branches concerning finances, businesses, utilization of funds, risk management, inspections by the competent authorities or other appropriate institutions or experienced professionals mandated thereby, and other matters requiring compliance.
Income from offshore insurance business operated by offshore insurance branches shall be exempt from business income tax. However, income derived from utilization of funds within the territory of the ROC shall be subject to taxation or exemptions as specified in the Income Tax Act.
Sales revenue from offshore insurance business operated by offshore insurance branches shall be exempt from business tax. However, sales revenue generated from utilization of funds within the territory of the ROC shall be subject to taxation or exemption as specified in the Value-Added and Non-Value-Added Business Tax Act.
All types of certificates used in offshore insurance business operated by offshore insurance branches shall be exempt from stamp tax. However, certificates issued in connection with utilization of funds within the territory of the R.O.C shall be subject to taxation or exemption as specified in the Stamp Tax Act.
Insurance benefits, interest generated on investment objects linked to investment-type insurance contracts or income derived from structured product transactions paid by offshore insurance branches to natural persons, juristic persons, government agencies or financial institutions outside the territory of the ROC in connection with their offshore insurance business shall be exempt from income tax withholding.
The exemptions from business income tax, business tax, stamp tax, and income tax withholding under the preceding four paragraphs shall be in force for a period of 10 years from the effective date of this Article. However for insurance contracts entered during the aforementioned period, the exemption period shall not exceed 30 years from the time the contract is entered to the time the effective period of the contract expires.
The scope of fund utilization within the territory of the ROC mentioned in the proviso of paragraphs 1 to 3 hereof shall be set by the FSC in consultation with the Ministry of Finance.
Articles 8, 10, 18 to 20, and 21-1 shall apply mutatis mutandis to offshore insurance business operated by offshore insurance branches.
If an offshore insurance branch commits any of the following acts, the competent authorities shall order the branch to take corrective action within a specified time period, or in addition thereto, impose a fine not less than Nine Hundred Thousand New Taiwan Dollars (NT$900,000) but not more than Forty Million and Fifty Hundred Thousand New Taiwan Dollars (NT$4,500,000); where the offense is deemed severe, or the branch fails to take corrective action during the time period set out by the competent authorities, the competent authorities may restrict the scope of its business or fund utilization, order the suspension of sale of insurance products or restrict the offering of new insurance products, or order it to dismiss its manager or employee, or void or revoke its business license:
1.Conducting any business other than that specified in Article 22-13.
2.Violating provisions of the regulations adopted under Article 22-15, paragraph 2 concerning finances, businesses, utilization of funds, and risk management.
3.Violating Article 8 applied mutatis mutandis under the preceding Article.
An offshore insurance branch that fails to file with the competent authorities for recordation, or to provide its business or financial information or other reports, or to report to the FSC for approval and notify the CBC under Article 20 or 21-1 as applied mutatis mutandis under Article 22-17, shall be subject to a fine of not less than Six Hundred Thousand New Taiwan Dollars (NT$600,000) but not more than Three Million New Taiwan Dollars (NT$3,000,000).
In addition to imposing an administrative fine under the preceding paragraph, the competent authorities shall also order the branch to become compliant within a specified time period; where the branch fails to become compliant within the specified time period, the competent authorities may order a new period for compliance and impose additional fines of not less than One Million and Two Hundred Thousand New Taiwan Dollars (NT$1,200,000) but not more than Six Million New Taiwan Dollars (NT$6 million) for each successive failure to comply until corrective action has been taken.
When the competent authority dispatches officers or mandates appropriate institutions or experienced professionals to inspect the business and financial conditions of an offshore insurance branch, or order an offshore insurance branch to report its business conditions within a specified time limit, a fine of not less than One Million and Eight Hundred Thousand New Taiwan Dollars (NT$1,800,000) but not more than Nine Million New Taiwan Dollars (NT$9,000,000) will be imposed if an responsible person or employee of the insurance branch has any of the following situations:
1.Refusing to allow inspection or to open the vault or other storage rooms.
2.Concealing or destroying account books or documents related to the business or financial conditions of the insurance branch.
3.Refusing to respond to, or making false representation in response to the queries of inspector without cause.
4.Missing the deadline for submission of financial reports, property list, or other related information and reports, or making false or incomplete representations, or missing the deadline for payment of inspection fees.