Earlier, the Government has conducted a consultation exercise on Hong Kong’s refined foreign-sourced income exemption (FSIE) regime and the tax certainty enhancement scheme for onshore gains on disposal of equity interests, both of which are envisaged to take effect in January 2024.

In light of the views and suggestions collected during the consultation, the Government would like to invite various industry sectors, including the shipping sector, to a briefing session on the key features of the two proposals.

Refined FSIE regime

The Government will introduce the Inland Revenue (Amendment) (Taxation on Foreign-sourced Disposal Gains) Bill 2023 (the FSIE Bill) into the Legislative Council on 18 October 2023. The FSIE Bill seeks to refine Hong Kong’s FSIE regime with respect to the tax treatment of offshore disposal gains in Hong Kong to bring the regime in line with the updated FSIE Guidance promulgated by the European Union in December 2022. Through the briefing session, the Government will provide a brief summary on the refined FSIE regime and address any enquiries that concerned parties may have.

Tax certainty enhancement scheme

Separately, the legislative proposal to implement the tax certainty scheme will also soon be introduced into the Legislative Council. With the FSIE regime in place on 1 January 2023, offshore disposal gains of equity interest would only be tax exempt if an investor has fulfilled the exemption criteria. In light of this, certain businesses may wish to mitigate any relevant tax risk by moving their offshore transactions to onshore. To facilitate businesses in carrying out business expansion and restructuring in Hong Kong, a tax certainty enhancement scheme will be implemented. Under the scheme, onshore disposal gains of equity interests meeting specified criteria would be regarded as not chargeable to profits tax in Hong Kong. The scheme would provide upfront certainty of non-taxation on onshore disposal gains of equity interests, hence reducing the tax risk and compliance cost of businesses.

Briefing Session

Through the Association, the Government would like to invite Association member companies to the briefing session to be conducted by the Financial Services and the Treasury Bureau and the Inland Revenue Department. During the briefing session, the Government will provide a presentation on the two legislative proposals and exchange views with the participants. The briefing will be conducted in English. Details of the briefing session are as follows –

Date: 19 October 2023 (Thursday)
Time: 2:30 pm – 4:00 pm (Hong Kong Time)

Join Zoom Meeting: https://us02web.zoom.us/j/82210708023?pwd=S2VKeDczTDlqaFZIVy81UTQycktlUT09

Meeting ID: 822 1070 8023
Passcode: 031562

If Members are interested in the subject matter, please arrange for your representatives to attend the briefing session.

And we should appreciate it if you would also advise me or Regulatory Affairs Director, Captain Nittin Handa, of the names of your representatives (before or after the briefing session).

Thank you for your attention.