On 31 October 2018, the Information Services Department in Hong Kong announced the “Inland Revenue (Amendment) (No. 7) Bill 2018” (“Bill”), which was gazetted on 2 November 2018 (Link).
The Bill seeks to:
- align the tax treatment of financial instruments with their accounting treatment;
- allow the deduction of interest expenses payable to overseas export credit agencies;
- refine the provisions that implement the arrangement for automatic exchange of financial account information in tax matters (AEOI);
- avoid potential double non-taxation of income of visiting teachers and researchers; and,
- revise the meaning of the sibling relationship.
In addition to changes in accounting standards, the Bill also includes refinements to the automatic exchange of information (“AEOI”) regime implemented since 2017, so as to closely follow the requirements promulgated by the Organisation for Economic Co-operation and Development (“OECD”). According to the Hong Kong representative, “The amendments related to the AEOI are particularly crucial for Hong Kong to preserve its competitiveness and reputation as an international financial and business center”.
The Bill was introduced into the Legislative Council on 14 November 2018.