Hong Kong attracts numerous multinational corporations and investors to make investments and develop their business there with a viewing to entering into the PRC markets. These corporations usually have a sophisticated business structure as the requirement of local laws by different jurisdictions may be different and thereby leading to different forms of investments.

As such, a well-developed business structure can ensure compliances in different jurisdictions with ease and minimize any potential risk.

In particular, cross-border tax restructuring in Hong Kong involves the strategic planning and reorganization of a company's international operations to ensure tax efficiency, compliance, and business growth.

Tax Certainty Enhancement Scheme (Effective from 1 January 2024)

The HK Government is helpful in making things a little bit easier, by introducing a Tax Certainty Scheme on Onshore Gain on Disposal of Equity Interests. The Scheme only targets disposal of equity interests and is effective from 1 January 2024. While the Scheme indeed provides some assurances on how shares could be regarded as capital asset, the Scheme is not that straightforward as you think!

Under Tax Certainty Enhancement Scheme, two of the most important requirements is as follows:-

- Equity investment of 15% or above

- At least 24 months of holding period

Being one of the most vibrant international financial centres in the world, Hong Kong is famous for attracting investors from all over the world. If the investors could make use of Capital Gain Claim wisely, their investment costs could be greatly reduced and hence a higher return on investment could be achieved.

But what exactly are the benefit can a cross-border restructuring brings?

l Tax Efficiency: Restructuring can help companies reduce their overall tax burden by utilizing Hong Kong's low tax rates and extensive tax treaty network. Meanwhile, re-domiciliation to Hong Kong may also be a proper planning to cope with ever-changing international tax environment.  

l Risk Management: By aligning operations with international tax laws, companies can mitigate potential tax risks and avoid costly disputes.

l Growth Opportunities: Strategic tax planning can uncover new business opportunities, allowing companies to expand into new markets or invest in high-growth sectors.

Key Aspects of Cross-Border Tax Restructuring

Ø International Tax Planning: Our team of tax experts provides comprehensive advice on international tax laws, regulations, and best practices to ensure your company's compliance.

Ø Structuring of Holding Companies: We assist in setting up holding companies in Hong Kong to optimize tax efficiency and facilitate cross-border investments.

Ø Transfer Pricing Analysis: We conduct transfer pricing studies to ensure that transactions between related parties are priced fairly and in line with market conditions.

Ø Mergers & Acquisitions (M&A) Tax Planning: Our services include tax advice during M&A transactions to minimize tax implications and maximize value. We also conduct due-diligence exercise to ensure any hidden risks are identified and minimize any costly dispute.

Ø Double Taxation Relief: We help companies claim relief under tax treaties to avoid double taxation on cross-border income.

Ø Compliance Management: We offer ongoing compliance services to ensure that your company remains compliant with all relevant tax laws and regulations.