On 23 December 2022, the Inland Revenue Department of Hong Kong has published updated guidance on the new Foreign-Sourced Income Exemption (FSIE) regime in the Official Gazette.
The FSIE which is introduced by the Inland Revenue (Amendment) (Taxation on Specified Foreign-sourced Income) Ordinance 2022 came into operation on 1 January 2023.
Under the new FSIE regime, certain foreign-sourced income accrued to a member of an MNE group (MNE entity) carrying on a trade, profession or business in Hong Kong is to be regarded as arising in or derived from Hong Kong and chargeable to profits tax when it is received in Hong Kong. Also, the Amendment Ordinance amended the IRO to provide for relief against double taxation in respect of certain foreign-sourced income and transitional matters.
