Latest Development of Hong Kong’s Refined Foreign Source Income Exemption Regime

Subsequent  to the consultation stage for the proposed refined foreign source income exemption (“FSIE”) regime, the Inland Revenue (Amendment) (Taxation on Specified Foreign-sourced Income) Bill 2022 (“the Amendment Bill”) was gazetted on 28 October 2022 and was introduced into the Legislative Council on 2 November 2022 proposing that starting from 1 January 2023, certain foreign-sourced income derived by a member of a multinational enterprise (“MNE”) group carrying on a trade, profession or business in Hong Kong is to be regarded as arising in or derived from Hong Kong and chargeable to profits tax when such income is received in Hong Kong.

Highlight of the newsletter:

- The Refined Foreign Source Income Exemption ("FSIE") Regime was gazetted on 28 October 2022.

- Applications for Commissioner of Inland Revenue's opinion on taxpayers' relevant tax position are now open until the enactment of the new FSIE legislation (i.e. 1 January 2023).

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For further enquiries, please feel free to contact your usual PKF tax executives, or reach out to our Senior Tax Manager Jeffrey Lau (jeffreylau@pkf-hk.com) or Tax Partner Henry Fung (henryfung@pkf-hk.com).