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IRD states its views on various tax and administrative issues
The minutes of the 2025 annual meeting of the Inland Revenue Department (IRD) with the Hong Kong Institute of Certified Public Accountants have recently been published.
The major tax and administrative issues include (i) group recharges of reinstatement costs under a service agreement may be deductible under section 16(1) of the Inland Revenue Ordinance; (ii) liabilities of family-owned investment holding vehicles need to be deducted in calculating whether the aggregate net asset value of their Schedule 16C assets meets the HK$240 million threshold to qualify for the tax concession; and (iii) satisfying the economic substance requirement under the foreign-sourced income exemption regime would not necessarily taint the offshore nature of interest income under the operations test.
The issues discussed in the meeting are summarized in our tax alert. While the IRD’s views on the issues are not binding, they provide a useful reference for taxpayers when planning their tax affairs.
Clients who have any questions on the issues discussed can contact their tax executive.