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February 23, 2023

Hong Kong announces 2023/24 Budget

  • As announced in the Budget, Hong Kong intends to implement the Global Anti-Base Erosion (GloBE) Rules under Pillar Two of the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) 2.0 project in 2025.

  • More certainty on onshore non-taxable capital gains on disposal of equity interests will be provided.

  • A new patent box regime will be introduced and existing aircraft leasing, funds and carried interest tax concession regimes will be reviewed and enhanced.

On 22 February 2023, the Financial Secretary (FS) of Hong Kong announced the 2023/24 Hong Kong Budget (Budget). This Alert summarizes the key features of the Budget.

Public consultation on BEPS 2.0 implementation in Hong Kong

The FS previously announced that Hong Kong will delay the implementation of the GloBE Rules in line with the other jurisdictions.In view of the recent OECD publications, the FS announced in the Budget that a public consultation will soon be launched on the intended implementation of the GloBE Rules and the domestic minimum top-up tax starting from 2025.

Guidelines on capital gains on disposal of equity interests

Further to the earlier announcement on introducing safe harbor rules for treating disposal gains on equity interests as being capital in nature,the FS indicated that an enhancement proposal will be put forward in mid-March to provide more certainty on the conditions that would entitle gains on disposal of equity interests in another entity to be regarded as onshore non-taxable capital gains in Hong Kong.

Other key tax measures and developments

The Budget also includes the following:

  • Introduction of a patent box regime whereby qualifying income from the exploitation of patents and patent-like intellectual property rights in Hong Kong will enjoy preferential tax treatment in Hong Kong. Related legislation is expected to be introduced in the first half of 2024.

  • Review of existing tax concession measures applicable to funds and carried interest after discussions with regulators.

  • Enhancement of the existing preferential tax regime for aircraft leasing. Legislation to be introduced this year includes replacing the 20% tax base concession of the regime (in lieu of granting tax depreciation allowances for aircraft) with a one-off 100% tax deduction of the aircraft acquisition cost in the first year.

  • Waiver of stamp duty for market makers in respect of their market-making activities for Renminbi (RMB)-denominated stocks of dual-stock counters in Hong Kong.

  • Proposed tax deduction for one-off lump sum fees paid by telecommunication companies for the rights to use radio spectrums in their business for multiple years.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Tax Services Limited, Hong Kong

Ernst & Young LLP (United States), Hong Kong Tax Desk, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, Chicago



  1. See EY Global Tax Alert, Hong Kong delays implementation of OECD Pillar Two rules, dated 17 August 2022.

  2. See EY Global Tax Alert, Hong Kong to further revise its foreign source income exemption regime to expand scope of disposal gain, dated 20 February 2023.


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