On 29 December 2017, the Inland Revenue (Amendment) (No. 6) Bill 2017 (Amendment Bill No. 6) and the Inland Revenue (Amendment) (No. 7) Bill 2017 (Amendment Bill No. 7) were introduced in Hong Kong's Legislative Council. The first reading for both Bills will take place on 10 January 2017.
Amendment Bill No. 6 includes measures in relation to Hong Kong's commitment to implement the four minimum standards of the BEPS package. These measures include:
Amendment Bill No. 7 includes measures to introduce a two-tiered profits tax rate regime for corporations and unincorporated businesses for any year of assessment commencing on or after 1 April 2018 as follows:
In order to avoid double benefits, the following will be excluded from the two-tiered profits tax rates regime:
Further, to ensure that the tax benefits will target SMEs, a restriction is included to limit the application of the two-tiered regime to only one enterprise nominated from among those which are connected (under the control of the same enterprise or entity).
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