miércoles, 22 de junio de 2016

Hong Kong: Corporate treasury center rules enacted

The Inland Revenue (Amendment) (No. 4) Bill 2015, passed by Hong Kong’s Legislative Council on 26 May 2016 and published in the official gazette on 3 June 2016, introduces rules designed to attract foreign companies to establish their corporate treasury centers (CTCs) in Hong Kong, to provide centralized treasury management services to companies in their groups. The new rules should help reinforce Hong Kong’s position as a competitive finance and corporate treasury hub.
The key features of the new measures that are relevant to CTCs and other Hong Kong taxpayers carrying on intragroup financing businesses are as follows:

  • A profits tax concession of 8.25% (i.e. 50% of the prevailing profits tax rate) for a qualifying CTC on profits from certain qualifying corporate treasury activities;
  • A deduction for interest paid by a Hong Kong taxpayer (other than a financial institution, but not necessarily a CTC) that carries on an intragroup financing business in Hong Kong, on loans from foreign associated corporations, if certain conditions are fulfilled; and
  • A deeming provision, under which interest income of a Hong Kong taxpayer (other than a financial institution, but not necessarily a CTC) that arises through or from the carrying on of an intragroup financing business in Hong Kong will be deemed Hong-Kong source taxable receipts.

The CTC rules and interest deductibility rules apply retroactively as from 1 April 2016, and the deeming provision on interest income applies as from 3 June 2016.
Source: Deloitte

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