Hong Kong Launches Company Re-Domiciliation Regime

The Hong Kong Government will officially launch the 'Company Re-Domiciliation Regime' on May 23, 2025. This allows companies registered outside of Hong Kong to transfer their place of registration to Hong Kong while preserving their legal identity and business continuity, and re-register as Hong Kong companies under the Companies Ordinance (Chapter 622). **Purpose and Background** This regime aims to consolidate Hong Kong's position as an international business and financial center, providing companies with a flexible re-domiciliation pathway, particularly attracting multinational enterprises seeking to relocate from low or no-tax jurisdictions in response to the global minimum tax (BEPS 2.0). **Tax Arrangements and Impact** * **Tax Residency**: Re-domiciled companies will be considered corporations established in Hong Kong, meeting the definition of a Hong Kong tax resident, and can enjoy the benefits of double taxation agreements signed between Hong Kong and other jurisdictions. * **Profits Tax Liability**: * If a company was already operating in Hong Kong and generating taxable profits before re-domiciliation, it must pay profits tax on those profits. Re-domiciliation will not exempt this tax liability. * If a company was not operating in Hong Kong before re-domiciliation, it will not be subject to profits tax for the period before re-domiciliation. * **Transitional Tax Arrangements**: Schedule 17L has been added to the Inland Revenue Ordinance, stipulating that expenses incurred by re-domiciled companies before re-domiciliation may be deductible when calculating profits tax after re-domiciliation, provided certain conditions are met. **Other Key Points** * **Legal Amendments**: The 2025 Companies (Revision) (No. 2) Ordinance amended the Companies Ordinance and related legislation, including the Inland Revenue Ordinance, to implement the company re-domiciliation regime. * **Handling of Inventory**: Inventory acquired by re-domiciled companies before re-domiciliation and used in Hong Kong business after re-domiciliation, its cost or value on the date of re-domiciliation (whichever is lower) may be treated as a deductible item. For further information or to consult detailed information, please refer to the relevant pages on the Hong Kong Inland Revenue Department's official website.