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Consultation paper issued on safe harbor rule for onshore gains on disposal of equity interests
The Treasury Branch of the Financial Services and the Treasury Bureau (FSTB) issued a consultation paper late last month entitled “Enhancing Tax Certainty of Onshore Gains of Equity Interests” (the Paper) seeking the views of stakeholders on the proposals contained in the Paper.
Subject to the views collected in a two-month consultation period, the HKSAR Government (the government) will codify the proposals by way of amending the Inland Revenue Ordinance, the proposed legislation taking effect from 1 January 2024.
For this purpose, “equity interests” include ordinary shares, preference shares and partnership interests.
This alert explains the conditions for the safe harbor rule whereby onshore disposal gains on equity interests, while not subject to the foreign source income exemption (FSIE) regime effective from 1 January 2023, will be accepted as being non-taxable capital gains in Hong Kong.
Clients who have any questions on the above or thoughts on the proposed safe harbor rule can contact their tax executives and we will convey the same to the FSTB in an appropriate manner.