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Tax deferment scheme researched
By Zhang Fengming |
April 22, 2009, Wednesday
|
Online Edition
Online Edition
A SCHEME that will let people defer paying tax on individual pensions is expected to be finalized in the second half of the year.
The scheme is one of Shanghai's innovations from the State Council guidelines to build Shanghai into a major financial hub by 2020.
A team has been set up to oversee the scheme from research to implementation with regulators and insurers such as China Life Insurance, China Pacific Insurance and Ping An Pension, an unnamed source said.
The "exempt, exempt and tax" scheme is a mechanism that will let policyholders avoid paying tax on pensions when they buy policies and pay the tax when they ultimately withdraw their profits.
The program will be an incentive for people to buy retirement policies and boost insurers' pension products. The practice is already popular in western countries.
A cap will be set on the investment to avoid tax evasion. But details such as the amount of the cap and how the tax will be collected are still being discussed, the source said.
"The scheme is not only an issue within the insurance industry, but is also relevant to bodies such as the tax and finance authorities. We need more cooperation and the research must be feasible,"he said.
China is encouraging people to buy financial products such as pensions for retirement to ease its cradle-to-grave social welfare system.
Insurers have launched pension schemes in China but the market is still emerging.
The scheme is one of Shanghai's innovations from the State Council guidelines to build Shanghai into a major financial hub by 2020.
A team has been set up to oversee the scheme from research to implementation with regulators and insurers such as China Life Insurance, China Pacific Insurance and Ping An Pension, an unnamed source said.
The "exempt, exempt and tax" scheme is a mechanism that will let policyholders avoid paying tax on pensions when they buy policies and pay the tax when they ultimately withdraw their profits.
The program will be an incentive for people to buy retirement policies and boost insurers' pension products. The practice is already popular in western countries.
A cap will be set on the investment to avoid tax evasion. But details such as the amount of the cap and how the tax will be collected are still being discussed, the source said.
"The scheme is not only an issue within the insurance industry, but is also relevant to bodies such as the tax and finance authorities. We need more cooperation and the research must be feasible,"he said.
China is encouraging people to buy financial products such as pensions for retirement to ease its cradle-to-grave social welfare system.
Insurers have launched pension schemes in China but the market is still emerging.
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