Highlights

The Inland Revenue (Amendment) (Taxation on Specified Foreign-sourced Income) Ordinance 2022 came into effect from 1 January 2023, which refined the FSIE regime under the Inland Revenue Ordinance. 

Under the existing refined FSIE regime, specified foreign-sourced income (i.e. interest, dividend, disposal gain on the sale of equity interests, and intellectual property income) accrued on or after 1 January 2023 to an multinational enterprise (“MNE”) entity carrying on a trade, profession or business in Hong Kong (irrespective of its revenue or asset size) is deemed to be arising in or derived from Hong Kong (and not to be regarded as arising from the sale of capital assets even if it so arises), and chargeable to profits tax when it is received in Hong Kong, unless the MNE entity satisfies the requirements under the relevant exception provisions, namely the economic substance requirement, the nexus requirement and the participation requirement.

The refined FSIE regime will be fine-tuned to cover foreign-sourced disposal gains in relation to assets other than equity interests in light of the European Union’s update to its Guidance on Foreign Source Income Exemption Regimes in late 2022.  In addition, a tax certainty enhancement scheme for onshore equity disposal gains will be introduced to provide greater upfront certainty of non-taxation to taxpayers.  The legislative amendments are expected to be made by the end of 2023 for implementation with effect from 1 January 2024. 

In this webinar, the speakers will share with you the latest development of the refined FSIE regime.  Specifically, the webinar will cover the following areas:

1. Overview of the existing FSIE regime
2. Latest update on proposed refinements to the FSIE regime for foreign-sourced disposal gains
3. Consultation on proposed tax certainty enhancement scheme for onshore equity disposal gains
4. Potential impacts of the proposed refinements to the FSIE regime and enhancement scheme on corporations in Hong Kong

Speaker(s)

Ms. Yan Yeung, Partner, Tax services, PwC Hong Kong

Yan Yeung is a Partner of PwC Hong Kong’s corporate tax practice. She has 20 years of experience in providing Hong Kong and international tax compliance and consulting services to local, regional and multinational clients. She has been actively taken part in regional corporate structuring, merger and acquisition, tax due diligence, tax investigation, tax accounting and IPO projects. Yan is also a frequent speaker in tax seminars organised by accountancy and taxation professional bodies in Hong Kong. She is a member of The Hong Kong Institute of Certified Public Accountants and a Chartered Tax Advisor of The Taxation Institute of Hong Kong.

Ms. Blanch Fong, Manager, Tax Services, PwC Hong Kong

Blanch is a Tax Manager at PwC Hong Kong’s corporate tax practice. She joined PwC Hong Kong in 2016. She has accumulated experience in providing Hong Kong tax and consulting services to multinational and domestics clients from various industries, including real estates, property development, consumer and industrial products, shipping, as well as manufacturing and trading industries. She graduated from the University of New South Wales and is a member of the Certified Practising Accountant of Australia.