PRESS RELEASE

(Source : Government Information Centre)

Consultation on Exemption of Offshore Funds from Profits Tax

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The Financial Services and the Treasury Bureau (FSTB) issued a paper today (January 14) for a one-month consultation on the proposed amendments to the Inland Revenue Ordinance (IRO) for exempting offshore funds from profits tax.

"The proposal, announced by the Financial Secretary in the 2003-04 Budget, aims to reinforce the status of Hong Kong as an international financial centre by increasing its attractiveness to offshore fund managers," Mr Frederick Ma, the Secretary for Financial Services and the Treasury, said.

"This legislative amendment exercise will bring Hong Kong into line with major international financial centres such as New York and London where offshore funds meeting specific requirements are not subject to tax," he said.

The proposed amendments to the IRO seek to exempt fund entities and non-fund entities resident outside Hong Kong from profits tax in respect of any income derived from transactions undertaken in Hong Kong through a broker or an approved investment adviser. To prevent round-tripping by local funds, anti-avoidance measures are also proposed.

Mr Ma said, "Granting profits tax exemption to trading gains of offshore investors would help promote the development of the fund management industry in Hong Kong. We look forward to receiving market comments on the proposed legislative amendments."

"We will continue to work with the industry to identify other measures to enhance our competitiveness as a world class asset management centre in the region.

"Subject to the outcome of the consultation, we will work towards an early introduction of the Inland Revenue (Amendment) Bill into the Legislative Council," he added.

The consultation paper is available on the website of FSTB. Interested parties are invited to send their comments to FSTB by February 13, 2004.

Ends/Wednesday, January 14, 2004

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