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Fifth Protocol to Arrangement for Avoidance of Double Taxation and the Prevention of Fiscal Evasion between Mainland and Hong Kong
Monday, 23 September 2019 09:13

The Fifth Protocol to the Arrangement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion between the Mainland of China and the Hong Kong Special Administrative Region was signed in July 2019. The Fifth Protocol will come into force after the completion of ratification procedures and notification by both sides.

The new article is going to provide tax relief to qualified Hong Kong and Mainland teachers and researchers working on the other side. A qualified teacher or researcher, who is employed in Hong Kong or the Mainland and engages in teaching and research activities on the other side, shall be exempt from taxation on that other side for a period of three years, provided that the relevant income has been subject to tax on the side where the person concerned is employed.

In additional, the Fifth Protocal incorporated the measure to prevent tax treaty abuse from the Base Erosion and Profit Shifting package promulgated by the Organisation for Economic Co-operation and Development in October 2015, including the amendment of preamble and certain articles, such as Article 4 Resident; Article 5 Permanent Establishment; Article 13 Capital Gain and etc.

Arrangement for Avoidance of Double Taxation and the Prevention of Fiscal Evasion between Mainland and Hong Kong (Chinese version only), please visit the website:

Details of the Fifth Protocol (Chinese version only), please visit the website:

The above information was extracted from the press release of Hong Kong Inland Revenue Department. For more information, please visit the website:


Hong Kong Rated Compliant in FATF mutual evaluation
Tuesday, 27 August 2019 07:29

The HKSAR Government has issued a press release on the matter that in the mutual evaluation undertaken by member jurisdictions of the Financial Action Task Force (“FATF”), Hong Kong has become the first member jurisdiction in the Asia-Pacific region to have achieved an overall compliant result regarding its anti-money laundering and counter-terrorist financing (“AML/CTF”) regime.

Since 1991 Hong Kong has been a member of the FATF. The FATF is an inter-governmental body which comprised 39 major economies of the world. It sets global standards for AML/CTF. The FATF conducts peer reviews of member jurisdictions regularly to assess their compliance with the international AML/CTF standards under a mutual evaluation process.

10 experts from the FATF and the Asia/Pacific Group on Money Laundering formed an assessment team and undertook the mutual evaluation lasting for over 1 year. The Mutual Evaluation Report (“the Report”) of Hong Kong was examined by the full FATF membership at its June Plenary held in Orlando, the US. The Report will be published by the FATF in September 2019.

As per the findings in the Report, Hong Kong has a strong legal and institutional framework for AML/CTF, particularly effective in the areas of risk identification, law enforcement, asset recovery, counter-terrorist financing and international co-operation. Our company secretary, Ms. Alberta Sie, being one the Professional Services Panel member of Hong Kong Institute of Chartered Secretaries, had some involvement in the mutual evaluation last year.

Companies Registry will work hand-in-hand with professional parties to maintain the robust AML/CTF regime of Hong Kong.

For more details:

Hong Kong Inland Revenue Department (IRD) Revises Practice Notes on Deduction of Foreign Taxes
Tuesday, 27 August 2019 05:45

In July 2019, the Inland Revenue Department has published an update version of Department Interpretation and Practice Notes (DIPN) No. 28 (Revised) on the provisions relating to deduction of foreign taxes. The changes were made in light of the enactment of Inland Revenue (Amendment) (No. 6) Ordinance 2018. IRD would provide more guidance in DIPN No. 28 (Revised).

Tax on profits is not an outgoing or expenses incurred in producing chargeable profits, the tax is not deductible. Specifically, section 17(1)(g) provides that no deduction shall be allowed in respect of any tax paid or payable under the Inland Revenue Ordinance other than salaries tax paid in respect of employee’s remuneration. However, foreign taxes and duties not calculated by reference to profits will be considered for deduction, for examples, rates levied on properties, vehicle licence fee, duties on commodities or foreign taxes and duties not levied by reference to profits.

Before the enactment of Inland Revenue (Amendment) (No. 6) Ordinance 2018, regardless of whether there was a Double Taxation Agreement (DTA) have been made between Hong Kong and foreign countries, Inland Revenue Ordinance (IRO) section 16(1)(c) provided unilateral relief from double taxation for foreign tax paid on specified interest and gains in the form of a deduction.

The main changes in DIPN No. 28 (Revised) focus on the enactment of IRO section 16(2J), which is effective from the year of assessment 2018/2019, such unilateral relief from double taxation would not apply in relation to any tax paid in a territory if:

(a) the territory is a DTA territory; and

(b) under IRO section 50, tax payable in the territory by a Hong Kong resident person in respect of the profits is to be allowed as a credit against tax payable in Hong Kong by the Hong Kong resident person in respect of the profits.

The key reason for changing is that DTA is intended to provide a comprehensive solution to all tax matters which are within its scope. The international practice is that where a DTA is in place, relief from double taxation should be allowed under the DTA only to the extent contemplated by it. The tax credit approach is adopted by Hong Kong in all existing DTAs. IRO section 16(2J) seeks to ensure that the DTAs will prevail in case of any conflicts between the provisions in the IRO and those in the DTAs.

Reference :

Stamp Duty Exemption on Delivery of Hong Kong Stocks as Consideration for the Allotment or Redemption of a Share or Unit of an Authorized Open-ended Collective Investment Scheme
Monday, 11 March 2019 04:00

On 7 January 2019, the Inland Revenue Department released a Stamping Circular which is about Stamp Duty Exemption on Delivery of Hong Kong Stocks as Consideration for the Allotment or Redemption of a Share or Unit of an Authorized Open-ended Collective Investment Scheme.

Effective from 30 July 2018 (“Relevant Date”), the Securities and Futures (Amendment) Ordinance 2016 (“the Amendment Ordinance”) amended the Stamp Duty Ordinance (Cap. 117) (“SDO”). Stamp duty for the sale and purchase of Hong Kong stocks in consideration of the allotment or redemption of shares or units of an authorized open-ended collective investment scheme is exempted.

Authorized open-ended collective investment scheme (“the Scheme”) means an open-ended collective investment scheme authorized under section 104 of the Securities and Futures Ordinance (Cap. 571)

Open-ended collective investment scheme, which in turn means a collective investment scheme the shares or units of which may be repurchased or redeemed at the request of any of its shareholders or unit holders—

(a)    at a price calculated wholly or mainly by reference to the net asset value of the scheme; and

(b)    in accordance with the frequency for repurchase or redemption, requirements and procedures set out in the offering document or constitutive documents of the scheme.

On or after the Relevant Date, given that the value of the Hong Kong stock is proportionate to the value of the share or unit, the stamp duty is exempted for making and execution of a contract note for the allotment or redemption of a share or unit of the Scheme. Also, the instrument of transfer effected for such purpose is not required to be stamped or endorsed under the SDO.

If the value of the Hong Kong stock sold or purchased is equivalent to the asset value of the Scheme which the allotted or redeemed share or unit represents as at the date of allotment and redemption, the allotment or redemption is considered to be proportionate.


(News Archives from HKIRD)

(Hong Kong e-legislation)

Three concessionary tax measures from Year of assessment 2018/19
Friday, 18 January 2019 09:12

With the passage of the Inland Revenue (Amendment) (No. 5) Bill 2018 by the Legislative Council on 14 November 2018, the three concessionary tax measures proposed in the 2018-19 Budget were became effective as followings:

  1. Electing for personal assessment (PA) of married persons
    Currently: Election for personal assessment must be made by husband and wife jointly. Separate taxation for the couple is not applicable under PA
    With effect from year of assessment 2018/19: husband and wife are with the option of electing for PA separately.
  2. Expenditure on Environmental Protection Facilities
    Currently: A deduction at 20% of the expenditure is allowed in each of the 5 consecutive years commencing from the year in which the expenditure is incurred.
    With effect from year of assessment 2018/19:  Full deduction is allowed during the basis period in which the capital expenditure incurred for procuring environmental protection installations is incurred.
  3. Tax exemption for debt instruments under the Qualifying Debt Instrument (QDI) Scheme
    Currently: interest income and trading profits derived from a debt instrument issued in Hong Kong with an original maturity of less than 7 years but not less than 3 years are subject to a concessionary tax rate equivalent to 50% of the normal profits tax rate.
    With effect from year of assessment 2018/19:  The scope of tax exemption for debt instruments under the QDI Scheme would be extended.  
    Please refer to for the updated list of Qualifying Debt Instruments.

The above information was extracted from the press release of Hong Kong Inland Revenue Department. For more information, please visit the website:

Reanda Hong Kong names three new partners in 2019
Thursday, 10 January 2019 06:30

Reanda Hong Kong is pleased to announce the promotion of three new partners to the firm, effective 1 January 2019. These individuals bring years of collective professional experience and expertise gathered from delivering a wide range of international projects across different industries. The new partners are: May Ko, Janet Chik and Nelson Tsang.

Reanda Hong Kong believes that it is vital to continue investment in people so the firm has the right level of expertise and experience in place to deliver value to clients in the ever-changing landscape. The promotions definitely highlight the depth and breadth of talent the firm has as well as reflect the firm’s continued investment in people.

Introducing Reanda Hong Kong's new partners – next generation of partners to bolster the firm’s practice

May Ko has over 20 years' experience in auditing, finance and administration with specialism in auditing and taxation. May is experienced in tax planning and auditing for companies in Hong Kong. She is the firm’s Ethics Leader who is responsible for reviewing and implementing of the firm’s quality assurance policy on ethics. In addition to her professional work for clients, she also provides training on accounting and auditing. May has worked in Reanda Hong Kong for 23 years, having joined the firm as an audit junior in 1996.

Janet Chiks  audit career spans over 20 years and has a wealth of experience in overseeing audits of pre-listing and listed companies as well as medium to large private entities. She has a wide portfolio of clients, including many regulated corporations as well as manufacturing, trading and construction companies. Janet has been with Reanda Hong Kong since 1997.

Nelson Tsang has over 15 years of experience in accounting, auditing, taxation and capital market in Hong Kong. He started his career in an international accounting firm and acquired vast experience in handling the audit of listed companies, MNCs, due diligence, M&A and IPO projects over a wide range of industries. He then worked in a listed company as an internal audit manager and as an equity analyst in an investment firm. His diverse background gives him thoughtful insights in helping clients of different countries and industries with practical and comprehensive advices.

These new partners will bring Reanda Hong Kong’s total number of partners to eight as of January 2019.

May Ko
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Janet Chik
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Nelson Tsang
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New Corporate Governance Code and Related Listing Rules
Thursday, 10 January 2019 02:50

On 1 January 2019, “Consultation Conclusions on Review of the Corporate Governance Code and Related Listing Rules” (Consultation Conclusions), new amendments to the Code and related Listing Rules issued by the Stock Exchange of Hong Kong Limited (HKEX) will come into effect.  The main changes included relate to independent non-executive directors (INEDs) include requiring greater disclosure on the process of their identification as a possible INED, their potential contribution to the board including diversity and their time commitment.  It will be mandatory for listed companies to have and to disclose their board diversity and nomination policies.  The criteria determining an INED’s independence has also been enhanced.

(A)  Independent Non-executive Directors

The role of nomination committee is critical for ensuring the board comprises directors with an appropriate balance of skills, experience and diversity of perspectives and its work with focusing independence and board diversity of Independent non-executive directors. For INED holding seventh or more listed company directorship, the listed companies are required to state in the circular to shareholders accompanying the resolution to elect its reasons for proposed INED would be able to devote sufficient time to the board.

Increasing in cooling off period will be implemented as following:-

- Persons with material interests in principal business activities require one-year period.

- Former professional advisers require two-year period.

- Former partners of listed company’s audit firm before they can be members of the audit committee require two-year period.

It also suggest to include a note for inclusion of person’s immediate family member in the assessment of a proposed INED’s independence and recommended best practice for an INED’s cross-directorships or significant links with other directors in the Corporate Governance Report.

(B)Nomination policy

Disclosure of nomination policy should be included in Mandatory Disclosure Requirement.

(C)  Directors’ attendance at meetings

Generally directors should attend general meetings to gain and develop a balanced understanding of the views of shareholders. Independent non-executive directors excluding non-executive directors and executive directors should meet with the Chairman at least annually.

(D) Dividend policy

Listed companies require disclosure of their dividend policies in annual reports.

More details may refer to the website of HKEX.




SFC’s statement on regulatory framework for investing in virtual assets
Friday, 04 January 2019 06:36

On 1 November 2018, the Securities and Futures Commission (SFC) published a speech, which includes the regulatory framework for virtual asset portfolio managers, fund distributors and trading platform operators.

Demand in investment in virtual assets, such as “cryptocurrency,” “crypto-asset” or “digital token,” increases in recent years. Such investments normally via unknown funds and unlicensed trading platforms have significant risks. The increasing investments draw the attention of SFC.

Although the virtual assets have several characteristics of money, including durability, divisibility, portability, limited supply and uniformity, the creditability of the virtual assets is very limited. The core value of virtual assets is acceptability of virtual assets in the illegal or unauthorized transactions. On the other hand, the increase in similar virtual assets will further weaken the “limited supply”, and then the creditability and value of the existing virtual assets. If the creditability of such virtual assets continues to deteriorate, to the extreme, they may only have the value of commemorative coins of IT technicians.

The investors of virtual assets may lack of any protection as virtual assets may fall outside the scope of SFC’s oversight under the existing regulations in Hong Kong. The speech illustrated (i) the regulatory approach of SFC for virtual asset portfolio managers and fund distributors; (ii) SFC’s intention to explore regulation to platform operators.