Because Taiwan has yet to join the Common Reporting Standard for Automatic Exchange of Financial Account Information in Tax Matters (CRS) and mainland Chinese customers have been actively purchasing OIU policies, the Taiwan OIU market has sold 164 policies in the first four months of 2017. Premiums totaled USD46.35 million, nearly NTD1.4 billion, more than the USD44.41 million annual results of the previous year. The latest statistics of OIU have been released, which include nine companies of Nan Shan Life, Cathay Life, TransGlobe Life, Taiwan Life, Fubon Life, Shin Kong Life, Mercuries Life, Chubb and China Life.
The cooperation between Nan Shan Life and Citibank has been fiercely seizing the OIU market. Nan Shan Life obtained eight OIU policies in a single month of April, the total premium of which reached USD9.54 million, setting a new record of the highest OIU premium income in a single month by a single company. Each of the eight policies of Nan Shan Life is a large policy, averaging USD1.19 million per policy, approximately NTD35.91 million. The aggregate OIU premium income of the first four months of 2017 of Nan Shan Life has reached USD18.14 million, accounting for nearly 40% of the entire market.
Mainland Chinese customers have made the greatest contribution to the explosive performance of OIU. According to the statistics of the life insurance industry, among the 164 offshore policies of the first four months of 2017, as high as 27% were purchased by mainland Chinese customers. Japanese and US customers each took 16%. Canadian customers also had 11%. Hong Kong and Malaysian customers each accounted for 4%.
Life insurance operators have pointed out that the main reason of mainland Chinese customers having contributed the most to the OIU premium is related to the fact that Taiwan still has yet to join CRS. Especially after Hong Kong, Singapore, South Korea, Japan, and China in the same region have joined CRS, these countries must follow the CRS regulation in which participating countries are required to exchange tax information with one another. Many mainland Chinese customers of high assets are worried that after the initiation of CRS, both their offshore and onshore assets will be exposed. As a result, it would better for them to first transfer the funds to Taiwan to avoid tax.
As for Japanese customers, they have always been the customer base of the Taiwan OIU market. Life insurance operators express that this is related to the long-term low interest rates in the Japanese financial markets. Including customers from Germany, Italy and Luxembourg, they purchase OIU policies also due to low interest rates in Europe.
Financial development has progressed on the global trend of transparency. Life insurance operators point out that the Financial Supervisory Commission, Republic of China (Taiwan) has allowed non-Taiwan nationals to purchase OIU policies via remittance, accounts transfer or credit card. When a large amount of funds is flowing into Taiwan, a company can purchase group insurance from OIU if the proposer of the insurance is included by the company as a staff of the overseas branch of a Taiwanese company and enjoy relevant insurance benefits and tax exemption. The capital gains generated by the OIU policy within the terms are exempt from paying personal income tax.
