EXEMPTION FROM PROFITS TAX (INTEREST INCOME) ORDER
12 of 2004
Exemption from profits tax
(1) Subject to subsections (2) and (3), where any sum is received by or accrued to-
(a) a corporation carrying on a trade, profession or business in Hong Kong; or
(b) a person, other than a corporation, carrying on a trade, profession or business in Hong Kong, in respect of funds of the trade, profession or business,
which sum is by way of interest derived from any deposit placed in Hong Kong with an authorized institution, the corporation or person other than a corporation shall be exempt from the payment of profits tax chargeable under Part IV of the Ordinance in respect of that interest, after deduction of all allowable outgoings and expenses under Part IV of the Ordinance incurred in producing such interest, and such exemption applies, in respect of-
(i) a deposit placed or renewed prior to 22 June 1998, to the whole of the interest accrued on or after such date; and
(ii) a new deposit placed or an existing deposit renewed on or after 22 June 1998, to the whole of the interest paid on such deposit.
(2) Subsection (1) shall not apply in the case of any deposit which is used to secure or guarantee money borrowed referred to in section 16(1)(a) of the Ordinance where the condition for the application of section 16(1)(a) of the Ordinance is satisfied under section 16(2)(c), (d) or (e) of the Ordinance and section 16(2A) of the Ordinance does not apply. (Amended 12 of 2004 s. 25)
(3) This section does not apply to interest received by or accrued to a financial institution.
(4) The exemption under this section applies whether or not a deposit is evidenced by a certificate of deposit.