March 2022 – The EU grey list – What does it mean for Hong Kong businesses
On 5 October 2021, following a review of the foreign source income exemption regimes of a few jurisdictions, the Council of the European Union (“EU”) added a few of these jurisdictions, including Hong Kong, to Annex II to the list of the Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes, the so-called “grey list”.
The Hong Kong Government has been working closely with the EU to understand the EU’s concerns about Hong Kong’s territorial basis of taxation. To avoid being moved to the “blacklist”, i.e., Annex I, Hong Kong has committed to amend Hong Kong’s tax system by 31 December 2022 with the amended system taking effect on 1 January 2023 with no grandfathering arrangement.
Topics discussed in this newsletter:
- The blacklist and the grey list
- Inclusion of Hong Kong in the grey list
- What happened to Malaysia and Singapore?
- Hong Kong’s response to the EU grey list
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Our experts
Pauline Leung Partner, Tax Services - Hong Kong
