Hong Kong's Financial Services and the Treasury Bureau and the Inland Revenue Department launched a six-week public consultation on proposed enhancements to the tax concession regime for corporate treasury centres, including a tiered structure that would introduce a pre-approval mechanism offering additional tax benefits and exemptions to qualifying entities.
Hong Kong’s Financial Services and the Treasury Bureau (FSTB) and the Inland Revenue Department (IRD) launched a public consultation on 27 July 2026, on proposed enhancements to the tax concession regime for corporate treasury centres (CTCs).
In June this year, the Government published the Action Plan to Promote the Development of CTCs in Hong Kong (Action Plan), which sets out a “4T” framework covering (i) tax revamp, (ii) tax agreements, (iii) targeted promotions, and (iv) talent and dialogue, with a view to attracting more multinational corporations to establish CTCs in Hong Kong, and enabling existing CTCs operating in Hong Kong to scale up their operations and fully leverage the city’s comprehensive financial ecosystem.
Following the direction of tax revamp under the Action Plan, the consultation paper proposes the introduction of a tiered regime for CTC tax concessions, with key features as follows:
Tier 1: Refine and broaden existing regime
Tier 1 of the proposed tiered regime comprises refinements to the existing tax concessionary measures applicable to qualifying corporate treasury centres (QCTCs) and corporations conducting intra-group financing business in Hong Kong.
The key proposals include:
- Allowing a CTC to defer tax deduction of interest expenses paid to a non-Hong Kong associated corporation to a year in which that corporation becomes subject to tax, if that corporation is not required to pay tax on the interest income in a particular year of assessment
- Expanding the scope of tax deduction of interest expenses to cover a broader range of corporations, including those carrying on a business of carrying out corporate treasury activities
- Making legal and administrative clarifications (such as the substantial activity requirement, the benchmark for intra-group financing business, and the definition of corporate treasury transactions, etc) to enhance tax certainty.
Tier 2: Introduce a pre-approval mechanism
Under Tier 2 of the proposed tiered regime, CTCs and their associated corporations that meet a set of specified conditions may, upon pre-approval by the IRD, enjoy additional tax benefits or flexibilities within a validity period of five years, including:
- Exemption for a pre-approved QCTC from complying with the “dedicated CTC condition” and the “safe harbour rule”
- A 50% tax exemption for interest income derived by pre-approved Hong Kong associated corporations from the pre-approved QCTC
- Exemption for a pre-approved QCTC from complying with the “subject to tax condition” on interest paid to its pre-approved non-Hong Kong associated corporations; and
- Removal of the “anti-tax arbitrage rule” for pre-approved Hong Kong associated corporations. Such corporations may claim full tax deduction for expenses paid or payable to the pre-approved QCTC, subject to a cap set at 30 per cent of its earnings before interest, taxes, depreciation and amortisation (i.e. EBITDA) for interest expense deduction.
Comments can be sent by post (24/F, Central Government Offices, 2 Tim Mei Avenue, Tamar, Hong Kong) or by email (ctc-consult@fstb.gov.hk) on or before 4 September 2026.
