Hong Kong's Inland Revenue Department has updated its lists of Qualifying Debt Instruments eligible for profits tax concessions and exemptions as of 31 December 2025, with the expansion now including sovereign bonds that qualify for full tax exemption.
The Hong Kong Inland Revenue Department (IRD) has released updated lists of Qualifying Debt Instruments (QDIs) eligible for profits tax concessions or exemptions as of 31 December 2025, with the latest update notably expanding coverage to include sovereign bonds qualifying for profits tax exemption.
The QDI lists include:
- Qualifying Debt Instruments issued before 1 April 2018
- Short Term/ Medium Term Debt Instruments Eligible for Profits Tax Concession
The short term/ medium term debt instruments are intended to be eligible for profits tax concession (i.e. chargeable at 50% of the normal profits tax rate) in accordance with section 14A(1) of the Inland Revenue Ordinance (IRO). - Long Term Debt Instruments Eligible for Profits Tax Exemption
The long term debt instruments are intended to be eligible for profits tax exemption in accordance with section 26A(1) of the IRO as from the year of assessment 2003/04.
Qualifying Debt Instruments issued on or after 1 April 2018
The debt instruments are intended to be eligible for profits tax exemption in accordance with section 14A(1B) of the IRO as from the year of assessment 2018/19.
Renminbi and Non-Renminbi Sovereign Bonds
With effect from the year of assessment 2009/10, sums received by, or accrued to, any person as interest paid or payable on, and profits derived from the sale, disposal or redemption upon maturity or presentment of, sovereign bonds denominated in the Renminbi and issued in Hong Kong by the Central People’s Government (CPG) are exempt from profits tax pursuant to the Exemption from Profits Tax (Renminbi Sovereign Bonds) Order (Cap. 112BH). Commencing from the year of assessment 2017/18, this exemption was extended to cover non-Renminbi sovereign bonds issued in Hong Kong by the CPG pursuant to the Exemption from Profits Tax (Non-Renminbi Sovereign Bonds) Order (Cap. 112DA).
People’s Bank of China Debt Instruments
With effect from the year of assessment 2018/19, sums received by, or accrued to, any person as interest paid or payable on, and profits derived from the sale, disposal or redemption upon maturity or presentment of, debt instruments issued in Hong Kong by the People’s Bank of China are exempt from profits tax pursuant to the Exemption from Profits Tax (People’s Bank of China Debt Instrument) Order (Cap. 112DF).
Debt Instruments Issued By Mainland Local People’s Government at Any Level
Sums received by, or accrued to, any person as interest paid or payable on, and profits derived from the sale, disposal or redemption upon maturity or presentment of, debt instruments issued in Hong Kong by the Shenzhen Municipal People’s Government were exempt from profits tax with effect from the year of assessment 2021/22 pursuant to the now-repealed Exemption from Profits Tax (Shenzhen Municipal People’s Government Debt Instrument) Order (Cap. 112DP). On 31 March 2023, Cap. 112DP was repealed and the Exemption from Profits Tax (Debt Instrument Issued by Mainland Local People’s Government at Any Level) Order (Cap. 112DR) commenced to take effect. Under Cap. 112DR, sums received by, or accrued to, any person as interest paid or payable on, and profits derived from the sale, disposal or redemption upon maturity or presentment of, debt instruments issued in Hong Kong by a local people’s government at any level in Chinese Mainland are exempt from profits tax with effect from the year of assessment 2022/23.
