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Bill for expanding the scope of foreign-sourced disposal gains now gazetted
Last Friday, on 13 October 2023, the legislative bill for the foreign-sourced income exemption (FSIE) regime to extend the scope of disposal gains to cover all types of assets was gazetted.
This change to the Hong Kong FSIE regime is proposed to comply with the updated Guidance on FSIE regimes issued by the European Union (EU) in December 2022. Otherwise, Hong Kong could be blacklisted by the EU and subject to certain tax-related defensive measures to be adopted by EU member states, e.g., a higher withholding tax suffered in the jurisdictions concerned.
Most of the features of the proposal have been referred to by the government during its previous engagement sessions with the stakeholders. Please refer to our previous alert issued on 14 August 2023 for detailed discussion of these features.