The Hong Kong Inland Revenue Department (IRD) recently provided further guidance on the foreign-sourced income exemption (FSIE) regime by publishing four new frequently asked questions (FAQs) on its designated FSIE webpage. In this tax alert, we summarise the key points covered in the new FAQs and share our observations.
Summary
The new FAQs on the FSIE regime
On 24 July 2025, the IRD posted four new FAQs1 onto its webpage on the FSIE regime. The newly added FAQs are all grouped under “Covered Income” and marked as NEW on the webpage. We summarise in the table below the key points covered in the new FAQs.
KPMG observations
We welcome the IRD’s further clarification on its interpretation and administration of the FSIE regime. However, as pointed out above, uncertainty on the tax treatment under the FSIE regime may still exist for more complex business arrangements or issues.
Business groups in Hong Kong deriving specified foreign-source income should take note of the IRD’s latest guidance, consider the implications of such guidance in light of their own facts and circumstances, and determine whether actions are required to ensure tax compliance and optimise the overall tax outcome.
If you have any questions or need any assistance regarding the FSIE regime in Hong Kong, please feel free to contact us or your usual KPMG tax advisor.
1 The IRD’s FAQs on the FSIE regime can be accessed via this link: https://www.ird.gov.hk/eng/faq/fsie.htm
2 For more details of the case, please refer to our previously issued Hong Kong SAR tax alert – Issue 15, November 2024.
The IRD’s further guidance on the foreign-sourced income exemption regime
Hong Kong SAR Tax Alert - Issue 6, July 2025
