Revocation of Thomson BankWatch as a credit rating agency recognised by the Monetary Authority

The Hong Kong Monetary Authority (HKMA) announced today (10 December) that the recognition of Thomson BankWatch (TBW) for the purpose of the profits tax concession scheme under section 14A(4)(b) of the Inland Revenue Ordinance has been revoked with immediate effect. This follows the recent notification by Fitch, Inc. ("Fitch"), another credit rating agency recognised by the Monetary Authority (MA) for the purpose of profits tax concession scheme, and which acquired TBW in December 2000, that all TBW ratings have now been superseded by Fitch ratings.

Under the profits tax concession scheme, which came into effect on 24 May 1996, interest income and trading profits derived from eligible debt securities are entitled to 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 recognised by the MA.

Subsequent to the revocation of TBW's status as a recognised credit rating agency, there are four existing credit rating agencies which have been recognised by the MA for the purpose of the profits tax concession scheme since May 1996:

The MA reserves the right to make adjustments to the list of rating agencies and minimum credit ratings recognised by the MA.

For further enquiries, please contact:

Jasmin Fung, Manager (Press), at 2878 8246 or
Thomas Chan, Senior Manager (Press), at 2878 1480

Hong Kong Monetary Authority

10 December 2001