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Market Taxation Guide - Hong Kong

01.12.2021

This Market Taxation Guide (Hong Kong) provides the following details:

Reference information about all taxes applied at source, to securities deposited in Clearstream Banking¹; and
Instructions for obtaining relief at source or a refund of withholding tax, where these are available, through Clearstream Banking.

New and improved tax information and procedures that become available will be included on an ongoing basis.

Important note:

This Market Taxation Guide (including any attachments and other links) is for informational purposes only and is not intended and should not be considered to be legal advice on any subject matter. Readers of this Market Taxation Guide, whether customers or otherwise, should not act or refrain from acting on the basis of any information included in this Market Taxation Guide without seeking appropriate legal or other professional advice.

Types of securities eligible in Clearstream Banking

Corporate bonds;
Government bonds;
Equities;
Chinese H shares: These shares are issued by companies based in mainland China and regulated by Chinese law but denominated in Hong Kong dollars and traded on the Hong Kong Stock Exchange; and
Stock Connect China A shares: These shares are Renminbi-denominated, issued by companies based in mainland China and are traded on Chinese stock exchanges;
China Bonds via Bond Connect (North Bound).

Withholding tax

	Holding restriction	Withholding tax rate	Relief at source	Quick refund	Standard refund
Corporate Bonds
	No	0%
No withholding tax is imposed on interests paid on Hong Kong Corporate bonds in Clearstream Banking.			n/a	n/a	n/a
Government Bonds
	No	0%
No withholding tax is imposed on interests paid on Hong Kong Government bonds in Clearstream Banking.			n/a	n/a	n/a
Equities
	No	0%
No withholding tax is imposed on dividends paid on Hong Kong Equities in Clearstream Banking.			n/a	n/a	n/a
Chinese H shares
	No	10% ^a
Clearstream Banking does not provide tax Relief at source, Quick or Standard refund services for the Hong Kong market.			No	No	No
Stock Connect China A shares
	No	10%^a
Clearstream Banking does not provide tax Relief at source, Quick or Standard refund services for the Hong Kong market.			No	No	No
Bond Connect Securities
	No	10% ^a
CIBM investments are exempt from Capital Gain Tax. Chinese Government Bonds (CGBs) and Municipals are exempt from Income Tax and VAT on interest, while other bonds are subject to 10% income tax and 6% VAT on interest. On 27 October 2021, the premier of the State Council of the People’s Republic of China chaired a State Council executive meeting, and announced that the temporary exemption on the corporate income tax (CIT) and value-added tax (VAT) of the coupon interest income received by overseas institutional investors (OIIs) in the China bond market will be extended to the end of the "14th Five-Year Plan" (ie end of 2025). Foreign institutional investors will also benefit from the extension of the tax exemptions on their bond investments in the Chinese bond markets via Bond Connect until the end of 2025.			No	No	No

a. The 10% tax is withheld by the issuing company or by its paying agent. No tax is withheld by Clearstream Banking.

Clearstream Banking does not provide tax Relief at source, Quick or Standard refund services for the Hong Kong market. Customers are advised to engage a local tax agent for all tax related matters according to market practice.

Capital gains tax

There is no capital gains tax withheld through Clearstream Banking on securities held in Clearstream Banking. Capital gains tax may however be payable on specific gains. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.

Stamp Duty

Debt securities:

There is no stamp duty withheld through Clearstream Banking on securities held in Clearstream Banking. Stamp duty may however be payable on specific transactions. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.

Equities:

There are three types of stamp duty on Hong Kong equities applicable in the Hong Kong market:

Stock transaction Stamp Duty,
Contract Notes Stamp Duty,
Transfer Deed Stamp Duty.

Details of the Stamp duty applied are available in the Settlement process section of the Market Profile – Hong Kong.

Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.

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1. "Clearstream Banking” refers collectively to Clearstream Banking S.A. and Clearstream Banking AG (for Clearstream Banking AG customers using Creation accounts).