PRESS RELEASE

(Source : Information Services Department)

Inland Revenue Ordinance (Amendment of Schedule 16) Notice 2018 gazetted

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      The Inland Revenue Ordinance (Amendment of Schedule 16) Notice 2018 (the Notice) was gazetted today (April 27).

      The Notice, made under section 20AC(5) of the Inland Revenue Ordinance (IRO), seeks to add a new transaction to the list of transactions specified in Part 1 of Schedule 16 to the IRO and the relevant definitions to Part 2 of Schedule 16 to the IRO, with a view to encouraging offshore venture capital funds to participate in the Innovation and Technology Venture Fund (ITVF) newly set up by the Government.

      Many offshore venture capital funds are concerned that under the present taxation regime, by co-investing with the Government under the ITVF, they would lose the profits tax exemption status, meaning that, potentially, all the profit arising from investment in and outside Hong Kong may become taxable profits, thus limiting their participation in the ITVF.

      "The proposed amendment will address the tax concern of offshore venture capital funds in participating in the ITVF, thereby encouraging more private investment in Hong Kong's innovation and technology (I&T) start-ups and building a more vibrant I&T ecosystem in Hong Kong," a government spokesperson said.

      The Government set up the ITVF in 2017 and will co-invest with selected partner venture capital funds in local I&T start-ups at an overall ratio of approximately 1:2.

      The Notice will be tabled before the Legislative Council on May 2 for negative vetting and will come into operation on June 22.

Ends/Friday, April 27, 2018
Issued at HKT 10:14

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