Hong Kong Tax News Flash

Oct 2022, Issue 15

The bill on refined FSIE regime is gazetted

The Inland Revenue (Amendment) (Taxation on Specified Foreign-sourced Income) Bill 2022 (the Bill) was gazetted on 28 October 2022, which introduces refinements to Hong Kong’s foreign source income exemption (FSIE) regime for four types of offshore income, namely (1) interest, (2) dividends, (3) disposal gains from the sale of equity interests, and (4) income from intellectual property (IP) (collectively, ‘specified foreign-sourced income’) expected to take effect from 1 January 2023.

On the same date, the Inland Revenue Department (IRD) also published on a dedicated webpage of its website, an administrative guidance on the refined FSIE regime which includes frequently asked questions, illustrative examples and procedures for applying for a Commissioner’s Opinion on the compliance with the proposed economic substance requirement.

This News Flash highlights the key features of the Bill, with reference to the IRD’s administrative guidance, and our observations. For the background and earlier developments of the proposed refinements to the FSIE regime, please refer to our previous News Flashes.