- Ms Ada Ma, Partner, Business Tax Services, Ernst & Young
- Ms Windsor Li, Director, International Tax and Transaction Services, Ernst & Young
The Inland Revenue (Amendment) (Taxation on Foreign-sourced Disposal Gains) Ordinance 2023 (the Ordinance) was gazetted on 8 December 2023, thereby formally becoming law effective from 1 January 2024.
The Ordinance expands the scope of foreign-sourced disposal gains under the FSIE regime from equity interests only to cover all kinds of movable and immovable assets. In other words, unless carved-out and relieved, such disposal gains, when received in Hong Kong, will be subject to tax in Hong Kong, if the exemption conditions such as the satisfaction of the economic substance requirement (ESR) for non-intellectual properties (Non-IP assets) or the nexus requirement for IP assets are not met.
A major carve-out under the FSIE regime for gains on the disposal of Non-IP assets which are sold in the ordinary course of business of a taxpayer as a trader has also been introduced. In terms of relief, subject to certain conditions, gains on the disposal of assets from one entity to its associated entity would be eligible for the intra-group transfer relief.
In addition, Hong Kong had proposed safe harbor rules in May 2023 under which onshore disposal gains on equity interests would be considered non-taxable capital gains in Hong Kong if at least 15% of the total equity interest in the investee entity was held for a continuous period of at least 24 months prior to the disposal. The related ordinance was gazetted on 15 December 2023 and is effective from 1 January 2024.
The purpose of this seminar is to provide an overview of the FSIE regime on the extended scope of foreign-sourced disposal gains, and TCES. Seasoned speakers will also discuss the possible impacts on common corporate structures and how taxpayers should get ready for the enactments from 1 January 2024 onwards.
- Overview of the FSIE regime
- Highlights of the extended scope
- Tax certainty enhancement scheme for onshore gains on disposal of equity interests
- Possible impacts of the refined FSIE regime and tax certainty enhancement scheme on the covered taxpayers
- Suggested actions and next step to be taken by the covered taxpayers
Ms Ada Ma
Ms Windsor Li
Seat guarantee will only be given to HKCGI Fellows and/or Practitioner’s Endorsement (PE) holders if registered 10 clear working days with payment prior to the date of the seminar.