Hong Kong imposes extra deduction of interest payable on money borrowed by a corporation

Hong Kong’s Government has gazetted Inland Revenue (Amendment) (No. 2) Ordinance 2016, which enables the deduction of interest payable on money borrowed by a corporation registered in Hong Kong and carrying an intra-group business.

The amendments have imposed concessionary profits tax rate for corporate treasury centres meeting specific conditions. The concessionary profits tax rate constituted 8.25 per cent.

The amendments have also clarified the profits tax application and stamp duties in respect of regulatory capital securities (RCSs) issued by banks. The amendments are introduced in Hong Kong legislation to comply with the Basel III capital adequacy requirements.

The concessionary profits tax rate and deduction of interest payable on money borrowed by a corporation are applied to profits accrued after April 1, 2016. The new banking rules will come into force since June 3, 2016.

The Inland Revenue Department has stated that it will issue Departmental Interpretation and Practice Notes due to the incorporated amendments.

Source:

http://www.ird.gov.hk/eng/ppr/archives/16060301.htm