Hong Kong 2018-19 Budget Insights

Developing Hong Kong’s bond markets

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Under the current Qualifying Debt Instrument (QDI) scheme, interest income and trading profits arising from QDIs will be tax exempt in Hong Kong if the term of maturity of the QDIs are not less than seven years. QDIs with a shorter term of maturity can also enjoy a 50% concession from the normal profits tax rate. To be eligible for the tax concession, the instruments must lodged and cleared by the Central MoneymarketsUnit of the Hong Kong Monetary Authority (HKMA).

In order to promote the further development of the bond market in Hong Kong, the Financial Secretary announced in the budget that the QDI scheme will be extended to cover debt securities which are not cleared with the HKMA but are listed on the Stock Exchange of Hong Kong. In addition, the scope of tax exemption will also extend from debt instruments with a term of maturity of not less than seven years to an instrument of any duration.