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Hong Kong Clarifies Tax Treatment Of Bank Capital

by Mary Swire, Tax-News.com, Hong Kong

28 October 2015


To help Hong Kong's banks to comply with Basel III's increased capital requirements, the Government is preparing legislative amendments that will clarify the tax treatment of capital securities held for regulatory reasons.

In his speech delivered on October 26 to the Hong Kong Association of Banks, Financial Secretary John C Tsang announced that capital instruments complying with Basel III requirements will be provided with debt-like treatment for profits tax assessment purposes. Related transactions in those instruments will also be exempt from stamp duty.

He hoped that this greater tax certainty would mitigate banks' compliance costs related to the new, stricter regulatory requirements. He said that legislation would be tabled in the Legislative Council shortly.

He also confirmed that the Hong Kong Government is "working hard in meeting other evolving global regulatory requirements as well," including the automatic exchange of tax information; the OECD's base erosion and profit shifting project; the regulatory framework for over-the-counter derivatives; and a resolution regime for financial institutions.

TAGS: money-laundering | compliance | tax | tax compliance | law | corporation tax | stamp duty | Hong Kong | tax breaks | regulation

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