A government focus-group meeting on "BEPS 2.0”
Circular Ref: A(20)174
Issue Date: 22 Sep 2020
The Secretary for Financial Services and the Treasury would like to have a focus group meeting with the maritime and aviation sectors to discuss the "BEPS 2.0”.
Briefly, we have been advised by the Transport and Housing Bureau (THB) on the following:
- BEPS 2.0 is a new initiative being considered by the Organisation for Economic Co-operation and Development (OECD). It comprises two pillars, one of which being the global minimum tax. Under that proposal, a jurisdiction is given a right to “tax back” profits which are taxed in another jurisdiction at an effective tax rate below the global minimum tax rate to be determined by the OECD. The proposal will mainly target at multinational enterprises (MNEs) which have a group revenue over a certain threshold (likely EUR 750 million). Please find attached a fact sheet on BEPS 2.0 for reference.
- Given the comparatively low tax rate in Hong Kong, as well as the preferential tax regimes (e.g. those on ship leasing and aircraft leasing) introduced by the Government over the past few years, it is envisaged that some MNEs operating in Hong Kong may have an effective tax rate lower than the global minimum tax rate (to be determined by OECD) and thus be affected, say, they may have to face a higher compliance costs and tax burden in meeting the revenue threshold.
- The Financial Services and the Treasury Bureau (FSTB) would like to apprise industry players of the upcoming new requirement and to share views with the industry on the potential impact of the new initiative and the possible measures that the Government could take.
- The Government would like to invite not more than seven representatives from the Hong Kong Shipowners Association, whose companies are MNEs and are engaged in ship leasing business, to join the focus group meeting, which will be attended by government officials from the FSTB, THB and Inland Revenue Department.
The details of the meeting are given below -
Date: Friday, 23 October 2020
Time: 3:00 p.m. – 5:00 p.m.
Venue: online via Zoom, in view of COVID-19
If you would like to attend the meeting, please let us know the name and post of your representative by Tuesday, 29 September 2020. In the event of “over-subscription”, preference would be given to MNEs with ship leasing business, and the Association secretariat will make a final decision on the name list to be submitted to the Government. We should be grateful for your understanding about this arrangement.
Date: Friday, 23 October 2020
Time: 3:00 p.m. – 5:00 p.m.
Venue: online via Zoom, in view of COVID-19
If you would like to attend the meeting, please let us know the name and post of your representative by Tuesday, 29 September 2020. In the event of “over-subscription”, preference would be given to MNEs with ship leasing business, and the Association secretariat will make a final decision on the name list to be submitted to the Government. We should be grateful for your understanding about this arrangement.