Hong Kong's foreign-sourced income exemption now covers all disposal gains
Since 1 January 2024, offshore gains on any asset received in Hong Kong by a multinational group member can be taxed unless the exemption conditions are met.
- Where
- China ↔ Africa · China ↔ ASEAN · US ↔ Japan · Hong Kong SAR
- Published
- Last reviewed
- Prepared
- Prepared by the Intelligence desk with AI-assisted research from the cited sources, checked on 12 November 2026.
- Effective
- 1 January 2024
- Version
- 1
What changed
Hong Kong's foreign-sourced income exemption (FSIE) regime has applied since 1 January 2023. It covers certain foreign-sourced passive income received in Hong Kong by members of multinational groups: interest, dividends, intellectual property income and disposal gains. The regime was widened from 1 January 2024, so disposal gains are no longer limited to equity interests. Such income remains exempt where the economic substance requirement, the participation requirement (for dividends and equity gains) or the nexus approach (for IP income) is met.
Who is affected
Hong Kong companies in multinational groups that hold foreign shares, property, debt or IP, including holding and treasury companies with few staff.
Why it matters
A Hong Kong holding company with no people or premises can find offshore dividends and gains taxed at the profits tax rates. Substance is now a precondition for the traditional offshore treatment.
What to examine next
Map every type of foreign passive income received in Hong Kong.
Document staff, premises and expenditure against the substance requirement.
Check participation conditions for each dividend and equity gain.
Compare with Singapore in the Singapore vs Hong Kong Decision Map.
Sources
- A Brief Guide to Taxes Imposed in Hong Kong 2024-25Inland Revenue Department · published 12 Nov 2026 · checked 12 Nov 2026 · primary source
- Taxation and accounting in Hong KongChina Briefing (Dezan Shira & Associates) · checked 12 Nov 2026 · secondary source
Next steps, if you need them
Original analysis by the UNBOUNDED Intelligence desk. Linked sources belong to their publishers. This briefing is information, not legal, tax, investment or other professional advice. Its appearance here is not an endorsement by UNBOUNDED or any institution of a transaction, jurisdiction, strategy or counterparty.