The Hong Kong Monetary Authority announced today (23 June) that the minimum rating required for Rating and Investment Information, Inc. (R&I), a recognised credit rating agency for the purpose of the profits tax concession scheme under section 14A(4)(b) of the Inland Revenue Ordinance, has been revised from BBB+ to BBB- with immediate effect. The decision resulted from an updated assessment of the quality of R&I's ratings, based on the international benchmarks of assessment of credit rating agencies' ratings provided by the Basel Committee on Banking Supervision under its Basel II framework.
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 Monetary Authority (MA).
Subsequent to the revision of the minimum rating requirement of R&I, the four existing credit rating agencies that have been recognised by the MA for the purpose of the profits tax concession scheme since May 1996 and their minimum rating requirements are:
|Recognised credit rating agency||Minimum rating required|
|Moody's Investors Service||Baa3|
|Rating and Investment Information, Inc.||BBB-|
|Standard and Poor's Ratings Services||BBB-|
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:
Ying-ying Cheng, Manager (Press), at 2878 1687 or
Sara Yip, Manager (Press), at 2878 8246
Hong Kong Monetary Authority
23 June 2006