Wednesday, June 9, 2021
Hong Kong's Legislative Council has passed a bill to implement a series of amendments to the Inland Revenue Ordinance.
The legislation amends:
Christopher Hui, the Secretary for Financial Services and the Treasury explained that the amendments codify the tax treatment "with regard to qualifying amalgamations and the transfer or succession of specified assets, offering better clarity and certainty of the relevant matters."
Hui added that the legislation will "provide the legal basis to enable more businesses to voluntarily file tax returns, including business statements electronically." The ultimate goal is to implement the electronic filing of profits tax returns through the Business Tax Portal.
Hui said that the changes to the foreign tax deduction regime "will reduce the tax liability of Hong Kong branches of foreign corporations, in particular foreign banks and holders of intellectual property." According to Hui, this will "help foster a more favorable business environment, particularly reinforcing Hong Kong's attractiveness as a banking location, and promoting Hong Kong as a research and development hub."
The Ordinance will come into operation on June 11, 2021, when it will be published in the Official Gazette. Amendments to the foreign tax deduction regime will take effect from the year of assessment 2021-22.