Insurance crackdown in China, Prudential stocks falls 13% as China tax crackdown

Shares of Prudential Plc tumbled as much as 13% after Chinese mainland authorities began taxing returns on offshore insurance policies, a crackdown that threatens one of the insurer’s most lucrative growth markets.

Prudential hit an intraday low of 952.20 pence after Caixin reported that mainland tax authorities have begun levying a 20% personal income tax on returns from Hong Kong insurance policies, closing a loophole that policyholders had previously used to shelter offshore gains.

Early enforcement cases have emerged in Beijing and Hangzhou, tax lawyers and insurance insiders told Caixin. The levies target two specific streams – dividend payouts and interest earned on prepaid premiums.

The crackdown comes as global financial data-sharing has improved, narrowing the information gaps that previously made enforcement difficult, Caixin reported.