Passage Of Tax Bills Welcomed

Secretary for Financial Services & the Treasury Christopher Hui welcomed the passage of the Revenue (Tax Concessions) Bill 2021 by the Legislative Council today.

The new ordinance gives effect to the tax concessions proposed by the Government this year.

Under the arrangement, salaries tax, tax under personal assessment and profits tax for the year of assessment 2020-21 will be reduced by 100% subject to a ceiling of $10,000 per case.

Mr Hui said the concessionary measure helps relieve the financial burden of taxpayers, adding that the Inland Revenue Department will reflect the reductions in the tax demand notes to be issued.

The measure will benefit 1.87 million people who pay salaries tax and tax under personal assessment and 128,000 businesses. Government revenue in 2021-22 will be reduced by $12.45 billion accordingly.

The financial services chief also welcomed the passage of the Inland Revenue (Amendment) (Tax Concessions for Carried Interest) Bill 2021.

The bill seeks to amend the Inland Revenue Ordinance to provide tax concessions for carried interest distributed by eligible private equity funds operating in Hong Kong.

It also expands the classes of assets that may be held and administered by a special purpose entity on behalf of a fund for the purpose of profits tax exemption regime for funds to facilitate the operation of funds in the city.

Mr Hui said the tax concession regime would attract more private equity funds to operate and be managed in Hong Kong, thereby boosting more investment management and related activities, which will bring business opportunities to various professional services and economic benefits to the city.

Under the arrangement, qualifying carried interest recipients have to fulfil substantial activities requirements for the tax concessions to apply.

The bill will commence on the day the amendment ordinance is gazetted, and will apply concessionary tax treatment to eligible carried interest received by, or accrued to, qualifying carried interest recipients on or after April 1, 2020.

The Monetary Authority and Inland Revenue Department will announce the implementation details in due course.