Hong Kong issued a draft tax legislation to promote it as a location for setting up a corporate treasury centre
Hong Kong Special Administrative Region (HKSAR) Government proposed to provide a more commercial friendly environment for enterprises to operate a corporate treasury centre (CTC) in Hong Kong in its 2015/16 Budget. It seeks to promote Hong Kong as a location for setting up a CTC by these multinational enterprises (MNEs), including Chinese MNEs engaged in 'Going Global' strategy.
On 4 December 2015, a bill containing the draft tax legislation on the above tax proposals was gazetted to introduce a concessionary profits tax rate for the qualifying profits derived by a qualifying CTC in Hong Kong and introduces tax deduction rules for the interest expenses incurred on money borrowed from a non-Hong Kong associated corporation by a corporation carrying on an intra-group financing business in Hong Kong.
The draft legislation will be subject to the scrutiny and approval of the Legislative Council before enacting into law. Once enacted, the provisions are expected to apply from 1 April 2016.
In light of this proposed incentive, Chinese MNEs are encouraged to review their current corporate treasury operation as part of their 'Going Global' strategy and consider if any restructuring of such operation, including reviewing their current financing operations in/outside Hong Kong and/or setting up a CTC in Hong Kong.
Other issues of China Tax/Business News Flash Visit our Tax Library.