According to the new provision, gains derived by a Hong Kong resident from investments in mainland-listed companies will be taxable only in Hong Kong, the Financial Services and the Treasury Bureau (FSTB) said.
This also will be applicable to the investments made in A-shares listed on the Shanghai Stock Exchange through the Shanghai-Hong Kong Stock Connect.
“[The new provision] clarifies the conditions under which an investment fund would be qualified for Hong Kong resident status, thus giving certainty to investment funds' application of the tax avoidance arrangements,” said K C Chan, the secretary for financial services and the treasury in the Hong Kong government.
“This will be conducive to actively promote the asset management businesses in Hong Kong, and will in turn help strengthen Hong Kong's status as an international financial centre,” Chan added.
The Stock Connect was launched in November to provide offshore investors access to mainland markets.
A survey by Hong Kong Fund Investment Association conducted in December showed the progaramme did not meet early market expectations due to investors’ concerns over technical, legal and tax issues.