February 23, 2023
Hong Kong announces 2023/24 Budget
On 22 February 2023, the Financial Secretary (FS) of Hong Kong announced the 2023/24 Hong Kong Budget (Budget). This Alert summarizes the key features of the Budget.
Public consultation on BEPS 2.0 implementation in Hong Kong
The FS previously announced that Hong Kong will delay the implementation of the GloBE Rules in line with the other jurisdictions.1 In view of the recent OECD publications, the FS announced in the Budget that a public consultation will soon be launched on the intended implementation of the GloBE Rules and the domestic minimum top-up tax starting from 2025.
Guidelines on capital gains on disposal of equity interests
Further to the earlier announcement on introducing safe harbor rules for treating disposal gains on equity interests as being capital in nature,2 the FS indicated that an enhancement proposal will be put forward in mid-March to provide more certainty on the conditions that would entitle gains on disposal of equity interests in another entity to be regarded as onshore non-taxable capital gains in Hong Kong.
Other key tax measures and developments
The Budget also includes the following:
For additional information with respect to this Alert, please contact the following:
Ernst & Young Tax Services Limited, Hong Kong
Ernst & Young LLP (United States), Hong Kong Tax Desk, New York
Ernst & Young LLP (United States), Asia Pacific Business Group, New York
Ernst & Young LLP (United States), Asia Pacific Business Group, Chicago
1 See EY Global Tax Alert, Hong Kong delays implementation of OECD Pillar Two rules, dated 17 August 2022.
2 See EY Global Tax Alert, Hong Kong to further revise its foreign source income exemption regime to expand scope of disposal gain, dated 20 February 2023.