The Inland Revenue (Amendment) (No. 3) Bill 2018 was gazetted today (April 20) to provide for enhanced tax deduction for expenditure incurred by enterprises on qualifying research and development (R&D) activities, in order to encourage more enterprises to conduct R&D activities in Hong Kong.

The Bill seeks to amend and restructure section 16B of the Inland Revenue Ordinance (IRO) to provide for a new schedule which sets out the operational details of the basic and enhanced tax deduction regimes for R&D activities. These include the definitions, scope and rates of the basic tax deduction and the enhanced tax deduction. The schedule also contains provisions to empower the Commissioner of Inland Revenue to seek advice from the Commissioner for Innovation and Technology (CIT) on R&D and qualifying R&D claims, as well as to empower CIT to designate local institutions as "designated local research institutions" for tax deduction purposes.

Subject to the passage of the Bill by the Legislative Council, enterprises will be able to enjoy additional tax deduction for expenditure incurred on domestic R&D. The first $2 million spent on qualifying R&D will enjoy a 300 per cent tax deduction and expenditure beyond that will enjoy a 200 per cent deduction. There is no cap on the amount of enhanced tax deduction.

"R&D is the fountain of innovation and technology. Commercialisation of R&D results and development of new products and services will help improve people's livelihood, bring about quality jobs and support the development of new industries in Hong Kong. The Government has set a goal to double the Gross Domestic Expenditure on R&D as a percentage of the Gross Domestic Product to 1.5 per cent by 2022. We also aim to progressively reverse the ratio of public sector versus private sector expenditure on R&D from government-led to private-led, to make such investment sustainable. The proposals in the Bill will serve to achieve the above objectives," a government spokesman said.

The proposal to provide enhanced tax deduction for enterprises' qualifying expenditure on R&D was an initiative announced in the Policy Address released in October 2017.

At present, the Inland Revenue Ordinance provides 100 per cent deduction for expenditure on R&D, as well as 100 per cent deduction for capital expenditure incurred on the purchase of plant or machinery for R&D in the year it was incurred.

The Bill will be introduced into the Legislative Council for first and second readings on May 2. 

According the new Hong Kong law effective on 1 March 2018, Great Matrix Services Limited is granted the “Trust or Company Service Provider Licence” on 18 May 2018 by the Hong Kong Regulators to carry on a trust or company service business in Hong Kong.

The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Tuesday) announced that the proposed new rules to broaden Hong Kong’s listing regime will take effect on 30 April 2018, from which date companies in emerging and innovative sectors seeking to list under the new regime may submit formal applications.​

HKEX’s three most actively traded equity index options (HSI, HSCEI and Mini-HSI options) to be included in derivatives market’s after-hours trading (5:15 pm to 1 am) from 14 May 2018

First options to be available for after-hours trading

New Trading Halt Mechanism to be introduced to after-hours trading for above options products as part of measures to maintain market integrity

Hong Kong Exchanges and Clearing Limited (HKEX) announced today (Tuesday) that market readiness has been confirmed and regulatory approval has been obtained to make its most actively traded equity index options - Hang Seng Index (HSI) Options, Hang Seng China Enterprises Index Options (HSCEI) Options and Mini-HSI Options - available for trading in the after-hours trading (T+1 Session) of its derivatives (futures and options) market from Monday, 14 May 2018. As in the T+1 trading of equity index futures, T+1 trading of the equity index options will begin at 5:15 pm and end at 1 am. 

For market protection in the T+1 Session, a Trading Halt Mechanism (THM) is introduced to avoid potential extreme options price movement in the T+1 Session as outlined below.

• THM applies only to equity index options trading in the T+1 Session.
   
• THM of options is linked to trading of the corresponding futures’ spot month contract.
   
• THM will be triggered if either:

1. the highest bid in the buying queue for the corresponding futures’ spot month contract reaches its upper price limit, which is 105 per cent of the futures’ last traded price in the regular trading session (9:15 am to noon; 1 pm to 4:15 pm); or
    
2. the lowest ask in selling queue for the corresponding futures’ spot month contract reaches its lower price limit, which is 95 per cent of the futures’ last traded price in the regular trading session2.

• If the THM is triggered, trading of the options is halted for the rest of the T+1 Session and will resume in the following regular trading session. A market message will be sent to all brokers and information vendors through the general distribution channels.

For further details of the THM and additional information about the T+1 session, please refer to After-Hours Trading section on the HKEX website.

To enhance the transparency of corporate beneficial ownership, the new requirements on the keeping of significant controllers registers by companies incorporated in Hong Kong commence operation today.

For details, please visit the dedicated thematic section on “Significant Controllers Register” at this website.

A new licensing regime for trust or company service providers (“TCSPs”) commences operation today.

Under the new licensing regime, TCSPs are required to apply for a licence from the Registrar of Companies and satisfy a “fit-and-proper” test before they can provide trust or company services as a business in Hong Kong. Any person who carries on a trust or company service business in Hong Kong without a licence commits an offence. TCSP licensees are also required to comply with the statutory customer due diligence and record-keeping requirements as set out in Schedule 2 to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, Cap. 615.