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Publications and Press Releases :
Press Release
: News Archives
Consultation on Refined Approach for Exempting
Offshore Funds from Profits Tax
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The Financial Services and the Treasury
Bureau (FSTB) has commenced a consultation on how to provide for
exemption for offshore funds from profits tax under the Inland Revenue
Ordinance (IRO). The aim is to reinforce the status of Hong Kong
as an international financial centre.
"Further to a discussion on the same subject with the industry
last year, having carefully considered the deputations and explored
various options, the Administration has refined the approach to
amend the IRO to effect the proposed exemption for offshore funds.
The aim of this consultation paper is to solicit views on this latest
approach," a government spokesman said today (January 4).
"Under this latest approach, profits tax exemption would be
granted to non-residents on income derived from securities trading
transactions undertaken in Hong Kong through an agent who is a broker
or an approved investment adviser as defined in the IRO.
"To prevent abuse, resident investors holding, either alone
or with associates, 30% or more of the interest in the tax-exempt
non-resident will be deemed to have derived taxable profits in respect
of the securities trading transactions carried out by the non-resident
in Hong Kong and liable to tax. However, the profits tax charge
on the resident investor will not cover any non-taxable capital
gains or offshore profits of the non-resident.
"In addition, resident investors in a non-resident fund that
is bona fide widely held or that is currently exempted from tax
under the IRO will also not be subject to the deeming provisions.
"Under this latest approach, brokers/investment advisors will
not be required to keep records of the residence status of the beneficial
owners of the non-resident claiming the tax exemption. This should
address the industry's concern in response to the approach suggested
earlier on the compliance burden on the brokers and investment advisors,"
the spokesman explained.
The consultation paper is available on the website of FSTB (http://www.fstb.gov.hk/tb/eng/info/con-paper-ptax.pdf.).
Interested parties are invited to send their comments to FSTB by
January 31, 2005.
Ends/Tuesday, January 4, 2005
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