October 2023 - Bill for Tax Certainty for Onshore Disposal Gain of Equity Interests

The Financial Services and the Treasury Bureau (“FSTB”) launched a consultation exercise on legislative proposal to introduce a tax certainty enhancement scheme for onshore equity disposal gains (“the Scheme”) in March this year. After taking into account of the stakeholders’ recommendations, the government has gazetted the Inland Revenue (Amendment) (Disposal Gain by Holder of Qualifying Equity Interests) Bill 2023 (“the Bill”) on 20 October 2023.

Under the Scheme, any Onshore Disposal Gain (i.e. gains or profits arising in or derived from Hong Kong on disposal of equity interests) derived by an eligible investor entity meeting specified conditions is to be regarded as capital in nature and not chargeable to profits tax.

The Scheme applies to Onshore Disposal Gains in relation to any disposal occurs on or after 1 January 2024 and accrues in the basis period for a year of assessment beginning on or after 1 April 2023.

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