Hong Kong Revises Foreign Income Tax Regime to Align With EU

Hong Kong’s Legislative Council passed legislation Wednesday amending its foreign income tax regime to make it compliant with the EU’s anti-tax avoidance and transparency standards.

The government said Wednesday it will request that the EU remove Hong Kong from its tax cooperation watchlist “as soon as possible.” The EU placed Hong Kong on its watchlist in October 2021, fearing the potential exploitation of the offshore income tax exemption by shell companies operating in the city.

The new foreign source income exemption (FSIE) regime, to take effect Jan. 1, 2024, expands the coverage of foreign-sourced gains arising from the sale of ...