Hong Kong published the Inland Revenue (Amendment) Bill 2015 in the Official Gazette on 20 March 2015. If approved, the bill would amend the Inland Revenue Ordinance in order to extend the profits tax exemption for offshore funds to private equity funds as announced by Hong Kong's Financial Secretary John Tsang earlier in the year.
Currently, the offshore fund tax exemption applies only for certain specified transactions including transactions in securities, futures contracts, foreign exchange contracts, etc., but not for shares in private companies. The new legislation will expand the exemption scope to include shares in private companies incorporated outside Hong Kong. It will also relax the requirement that qualifying transactions be arranged through a person with a Securities and Futures Commission (SFC) license, and will provide profits tax exemption for gains from the disposal of a qualifying offshore portfolio companies by special purpose vehicles, including Hong Kong SPVs.
The Bill will be tabled in the Legislative Council on March 25, and will have effect once published in the Official Gazette following approval.
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