APEC Taxation Services – New Hong Kong Tax guidance 17 Sept 2020
The Inland Revenue Department (“IRD”) has introduced new guidance on the profits tax treatment of leases accounted for under HKFRS 16 on 17 September 2020. Instead of following the strict deduction rule under section 16(1) of the Inland Revenue Ordinance (“IRO”).
The new guidance is seen as an alternative for taxpayers as lessees to adopt the accounting treatments under HKFRS 16 in respect of the lease expenditures and related gains and losses for profits tax purpose. This guidance is aimed to provide a general overview on the IRD’s assessing practice on lease accounting under HKFRS 16 only and it is no legal binding.