The Inland Revenue (Amendment) (No. 3) Bill 2018 (the "Bill") proposing an enhanced tax deduction regime for qualifying research and development (R&D) expenditures was gazetted on 20 April 2018 and introduced into the Legislative Council on 2 May 2018. The enhanced tax deduction, which was proposed by the Chief Executive in her 2017 Policy Address, is intended to encourage more enterprises to invest in R&D activities in Hong Kong. This alert outlines the key features of the proposed regime.
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