Hong Kong Tax News Flash

Jul 2024, Issue 11

FSTB releases consultation conclusion and latest legislative proposals on company re-domiciliation regime

On 3 July 2024, the Financial Services and the Treasury Bureau (FSTB) released the consultation conclusion regarding its proposals to introduce a company re-domiciliation regime (Conclusion). The Conclusion was published after receiving feedback regarding the FSTB’s consultation paper on the design of the proposed regime and related amendments to the Companies Ordinance (CO) and Inland Revenue Ordinance (IRO) issued in March 2023. For further information on the consultation paper, please refer to our previous news flash.

The proposal has received broad support from a diverse array of respondents. Taking into account the feedback received, the FSTB has refined its proposal. Specifically, the latest legislative proposals incorporate several favourable recommendations from PwC’s submission, including, among other things:

clarifying that a non-Hong Kong company applying for re-domiciliation to Hong Kong must originate from a jurisdiction that permits outward re-domiciliation.
relaxing the requirement on financial statements as proof of solvency.
simplifying the requirement on members’ consent.
providing unilateral tax credits to re-domiciled companies that are subject to an exit tax in their original domicile if their actual similar profits are subsequently taxed in Hong Kong.
streamlining regulatory approval for financial institutions re-domiciliation.

The FSTB is actively progressing with the legislative drafting process and is committed to introducing the amendment bill as early as practicable.

This news flash summarises the salient features of the latest legislative proposals and the comments made by the FSTB in response to the public consultation, and shares our insights on what these changes mean for companies aspiring to re-domicile to Hong Kong.