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IRD updates its Illustrative Examples in respect of specified foreign-sourced income exemption regime
IRD updates its Illustrative Examples in respect of specified foreign-sourced income exemption (FSIE) regime and appears to take a new position on what constitutes FSIE income being “received in Hong Kong”
Last Friday, the Inland Revenue Department (IRD) updated the Illustrative Examples posted on its website on how it would interpret what constitutes an in-scope multinational enterprise (MNE) entity receiving a previously unremitted specified foreign-sourced income in Hong Kong under section 15H(5) of the Inland Revenue Ordinance (IRO).
The new position, or a previous position now clarified by the IRD, is contained in Example 6 as updated and a new Example 9.
These two examples together with the exact wordings of Section 15H(5) of the IRO are reproduced in the Appendix to this alert.
This alert draws your attention to these most recent pronouncements by the IRD of their position. MNE entities should carefully consider the potential impact of the same when considering how to handle their unremitted specified foreign-sourced income in a tax efficient manner under the FSIE regime.
Clients who have any questions on any of the issues discussed in this alert can contact their tax executives.