Proposed reform to Hong Kong's foreign-sourced passive income taxation regime - how will it affect you?
In October 2021, the European Union included Hong Kong in the list of Non-Cooperative Tax Jurisdictions (or the watchlist) due to the concern over double non-taxation of foreign-sourced passive income under Hong Kong's foreign source income exemption regime. In response, the Hong Kong government proposed a draft legislation to refine Hong Kong's foreign source income exemption regime for passive income to prevent cross-border tax evasion. This amendment bill will be introduced to the Legislative Council in October 2022 and is expected to come into force on 1 January 2023 with no grandfathering arrangement (i.e., no transitioning period). The following summary is based on the latest proposals, but these details are still subject to an ongoing consultation process.
