EXPECTED EFFECTIVE DATE: 1 JANUARY 2024
A draft legislation that further refines Hong Kong’s FSIE regime by expanding the scope of foreign-sourced disposal gains (the 2023 Amendment Bill) was gazetted on 13 October 2023. The 2023 Amendment Bill expands the definition of disposal gain to include gains or profits derived from the sale of any property.
WHAT HAS HAPPENED IN 2023
In order to align with international efforts to combat cross-border tax evasion and prevent double non-taxation, Hong Kong has implemented changes to its Foreign Source Income Exemption (FSIE) regime for passive income. The relevant Ordinance became effective on 1 January 2023.
INITIAL SCOPE COVERED SINCE 1 JANUARY 2023
The scope of specified foreign-sourced income within the FSIE initially includes the following types of income arising in or derived from a territory outside Hong Kong:
- Interest income
- Dividend income
- Disposal gains from the sale of equity interests in an entity
- Intellectual property (IP) income
To gain a comprehensive understanding of these noteworthy reforms and their potential impact, check this out by the link below.