Hong Kong Tax Newsflash

Passage of foreign-sourced income exemption (FSIE) regime

Published date: 14 December 2022

The Inland Revenue (Amendment) (Taxation on Specified Foreign-sourced Income) Bill 2022 (Bill) on Hong Kong's FSIE regime was passed by the Legislative Council today.  The Bill provides that specified foreign-sourced income would be deemed taxable in Hong Kong unless certain conditions are met. The FSIE regime will be effective from 1 January 2023.

As a recap, the key features of the FSIE regime are summarized as follows:

  • Covered taxpayers
    An entity that is part of a multinational enterprise group and carries on a business in Hong Kong.
  • Covered income
    Foreign-sourced interest, dividends, disposal gains on equity interest and income from intellectual property (IP) that are received in Hong Kong.
  • Covered income will continue to be exempt from tax if certain conditions are met. 
  • Exemption conditions
    1. Economic substance requirement (for interest, dividends and disposal gains)
    2. Participation exemption (additional pathway for dividends and disposal gains)
    3. Nexus requirement (for IP income)
  • Where no exemption applies, double taxation relief is available.

For details of the FSIE regime, please refer to our summary diagram, Hong Kong Tax Analysis Issue H110/2022 , Hong Kong Tax Newsflash (Issue 163) and Hong Kong Tax Newsflash (Issue 165).


Tax Newsflash is published for the clients and professionals of Deloitte Touche Tohmatsu. The contents are of a general nature only. Readers are advised to consult their tax advisors before acting on any information contained in this newsletter.

If you have any questions, please contact our professionals:



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