Almost half of the foreign-funded insurance companies operating in the city have paid insufficient taxes, according to a recent campaign by the local taxation bureau.

During the campaign, to check the payment of taxes by foreign-funded insurance companies, the Guangzhou Local Taxation Bureau found that 13 of the 27 foreign-funded insurance companies registered in Guangzhou (excluding those registered with the Guangzhou Development District) had not paid taxes and fees in full.

According to the bureau, unpaid taxes and fees amounted to 13.59 million yuan (US$1.68 million).

"The 13 companies were primarily involved in insufficient payment of social pensions and personal income tax for their staff, as well as business tax," Wang Ling, an official with the local taxation bureau, told China Daily.

Insufficient payment of social pensions left 6.37 million yuan (US$785,450) unpaid, making up 47 percent of the total amount owing.

Evaded personal income tax payments for the companies' staff were valued at 3.66 million yuan (US$451,295), accounting for 27 percent of the total owing.

Wang declined to name the insurance companies involved.

She said that the local taxation bureau will probe deeper into the tax problems with the 13 companies and will focus more attention on personal income tax problems.

Some foreign-funded insurance companies have not paid personal income tax for sales agents' incentives including bonuses, commissions and holiday trips, while some Guangzhou-based representatives of overseas insurance companies have not declared personal income taxes honestly, she said.

General manager of a US insurance company's Guangdong branch, who wished to remain anonymous, said that State authorities should improve efficiency in granting permission for the business tax exemption on some insurance products.

The general manager also said the local taxation bureau should improve its efficiency in returning business tax payments to the insurance companies once they get the official permission.

Under state regulations issued in 2001, business tax on some insurance products, including those related to long-term life insurance, can be exempted under the condition that the insurance companies get official permission from the Ministry of Finance and the State Administration of Taxation.

(China Daily June 6, 2006)