The Hong Kong Monetary Authority (HKMA) has announced today that the ratings of Thomson BankWatch (TBW) will be recognized with immediate effect by the HKMA for the purpose of the profits tax concession scheme under section 14A(4)(b) of the Inland Revenue Ordinance. The minimum credit rating requirement applicable to TBW ratings will be BBB+.
Under the profits tax concession scheme, which came into effect on 24 May 1996, interest income and trading profits derived from eligible debt securities will enjoy a concessionary tax rate equal to 50% of the prevailing profits tax rate. To be eligible, a debt issue should, among other criteria, possess a minimum credit rating from a rating agency recognized by the HKMA.
In addition to TBW, four other credit rating agencies have been recognized by the HKMA for the purpose of the profits tax concession scheme since May 1996:
|Recognized rating agency||Minimum rating required|
The HKMA reserves the right to make adjustments to the list of recognized rating agencies and the minimum rating requirements from time to time.
Hong Kong Monetary Authority
23 January 1998