On 28 March 2024, the Hong Kong Inland Revenue Department published the Inland Revenue (Amendment) (Tax Concessions for Intellectual Property Income) Bill 2024 in the Gazette to implement the “patent box” tax incentive. The draft bill proposes a concessionary tax rate of 5% for qualifying intellectual property income. This legislation aims to encourage enterprises to forge ahead with more research and development (R&D) activities and promote intellectual property (IP) trading, strengthening Hong Kong’s competitiveness as a regional IP trading center.
The 2023 Policy Address has announced that the concessionary tax rate for the “patent box” tax incentive of 5% is substantially lower than the prevailing normal profits tax rate in Hong Kong, which is 16.5%. This aims to encourage the innovation and technology (I&T) sector to actively engage in more R&D activities and conduct commercialization transactions, making use of patents and other IP protections, and create more IPs with market potential as a catalyst for promoting I&T and IP trading activities.
The Bill will be introduced into the Legislative Council for first and second readings on 10 April 2024.
