Orbitax subscribers can now easily follow the latest COVID-19-related tax measures being implemented worldwide. New to Orbitax? Create a free account to access your dashboard and latest tax news.
News Share

The Tax Hub

Daily Tax Newsletter

Hong Kong

Responsive image

Hong Kong to Extend Tax Exemption for Offshore Funds to Onshore Funds

The Hong Kong Inland Revenue Department has announced the publication of the Inland Revenue (Profits Tax Exemption for Funds) (Amendment) Bill 2018, which will be introduced in the Legislative Council on 12 December 2018. The Bill provides for the extension of the profit tax exemption for offshore privately offered funds to onshore funds in order to resolve ring-fencing issues and avoid being listed as a non-cooperative jurisdiction by the EU.


The Government published in the Gazette today (December 7) the Inland Revenue (Profits Tax Exemption for Funds) (Amendment) Bill 2018 to provide profits tax exemption for eligible funds operating in Hong Kong.

A government spokesman said, "The Bill seeks to address the concerns of the Council of the European Union (EU) over the ring-fencing features of our tax regimes for privately offered offshore funds and enhance the competitiveness of our tax regimes by creating a level playing field for all funds operating in Hong Kong. This would help strengthen Hong Kong's position as an international asset and wealth management centre and drive demand for the related professional services in Hong Kong. Our financial services industry will benefit as a whole.

"In order to achieve the aforementioned objectives, we propose to introduce new and self-contained provisions in the Inland Revenue Ordinance (Cap. 112) (IRO) so that all funds operating in Hong Kong, regardless of their structure, their location of central management and control, their size or the purpose that they serve, can enjoy profits tax exemption for their transactions in specified assets subject to meeting certain conditions. A fund can also enjoy profits tax exemption from its investment in both overseas and local private companies."

The spokesperson added, "To minimise the risk of tax evasion, we will put in place certain anti-abuse measures, including certain requirements on a fund's investment in private companies in relation to holding of immovable property and assets, as well as holding period. Also, the current anti-round tripping provisions for resident persons will be retained. In short, the proposal has struck a balance between facilitating market development and preventing tax abuse. The existing provisions will be preserved except for the necessary changes."

Under the IRO, publicly offered funds, both onshore and offshore, are exempted from profits tax. For privately offered funds, only offshore funds and onshore privately offered open-ended fund companies are exempted from profits tax. Other onshore privately offered funds cannot enjoy profits tax exemption like their offshore counterparts. The EU has identified Hong Kong's tax regimes for offshore funds to be problematic on account of their ring-fencing features, and the Government has announced that a review would be conducted on the tax concession arrangements applicable to the fund industry with regard to the international requirements on tax co-operation.

The Bill will be introduced into the Legislative Council on December 12.

Powerful Tax Tools


FX Rates

Global FX Rates including Tax Year Average FX Rates and Spot Rates for all Reporting Currencies.


Corporate Tax Rates

Corporate tax rates, surtaxes, and effective tax rates for the current year, as well as historical rates and approved future rates.


Country Analysis

Detailed tax guidance for companies doing business in over 100 countries, including summaries and snapshots of key tax facts and issues.


Cross Border Tax Calculator

Calculate total tax costs and benefits of a cross border transaction including withholding tax, participation exemption and foreign tax credit rules.


Cross Border Tax Rates

Provides Domestic, treaty and EU cross border tax rates for over 5,000 country combinations for 9 different payment streams.



Complete overview of the OECD BEPS Project, including daily BEPS news, country adoption of BEPS measures, and an overview of the 15 BEPS Actions.


Tax Calendar

Customizable calendar tool that tracks corporate income tax, value added tax and transfer pricing obligations by country or entity.


Tax Forms

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.


Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.


Worldwide Tax Planner

Calculates the worldwide tax cost of what-if scenarios based on legal entity structure, taxable income, and cross border transactions.


Certified Rates Report

Customizable Certified Rates Report providing updated corporate and withholding tax rates at the end of each month for over 100 countries.


Withholding Tax Minimizer

Enables quick calculation of tax costs and benefits of cross border transactions considering all possible transaction combinations and optimal routes.


VAT Rates

Provides value added tax (VAT) rates, goods and services tax (GST) rates and other indirect tax rates for over 100 countries.


NOL Calculator

Country specific calculator to determine how net operating losses can be utilized in carryback and carryforward years.


Transfer Pricing Calculator

Calculates TP ratios under various TP methods and calculates the difference between target ratios and actual ratios.


Individual Income Tax Rates

Individual tax rates for over 100 countries.

Play of the Day

Translate Documents

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

We’re here to help

We’re here to answer any questions you have about the Orbitax products and services.

Send us a message

Who’s behind Orbitax?

We’re committed to providing high value, low cost tax research and management solutions.

Learn More