Hong Kong Ordinances

INLAND REVENUE ORDINANCE - SECT 14A

Qualifying debt instruments

(Past version on 01/04/1999).
(Past version on 17/04/1998).
(Past version on 30/06/1997).

(1) For the purposes of this Part the assessable profits of a person for sums
received by or accrued to the person as-

   (a)  interest paid or payable on a medium term debt instrument; and

   (b)  any gain or profit on the sale or other disposal or on the redemption
        on maturity or presentment of the medium term debt instrument, are
        chargeable to tax under this Part at one-half of the rate specified in
        Schedule 1 or Schedule 8, as the case may be.

(2)-(3) (Repealed 32 of 1998 s. 4)

(4) In this section- (Amended 34 of 2003 s. 3)

"debt instrument" (債務票據) means an instrument specified in Part I of
Schedule 6 that- (Amended 34 of 2003 s. 3)

   (a)  is in respect of a debt issue which in its entirety has been lodged
        with and cleared by the Central Moneymarket Unit operated by the
        Monetary Authority;

   (b)  subject to subsection (5), is issued by a person and has at all
        relevant times a credit rating acceptable to the Monetary Authority
        from a credit rating agency recognized by the Monetary Authority;

   (c)  (Repealed 34 of 2003 s. 3)

   (d)  subject to subsection (5), has-

        (i)    where it is issued before 1 April 1999, a minimum denomination
               of $500000 or its equivalent in a foreign currency; or

        (ii)   where it is issued on or after 1 April 1999, a minimum
               denomination of $50000 or its equivalent in a foreign currency;
               (Replaced L.N. 90 of 1999 and 44 of 1999 s. 11)

   (e)  is issued to the public in Hong Kong;

   (f)  if it is a scripless instrument, it is one that would qualify in the
        terms of this definition if it were in a physical form; (Amended 34 of
        2003 s. 3)

   (g)  is issued on or after the commencement of this section; (Amended 34 of
        2003 s. 3)

"medium term debt instrument" (中期債務票據) means-

   (a)  a debt instrument that-

        (i)    is issued before 5 March 2003;

        (ii)   has an original maturity of not less than 5 years or is
               undated; and

        (iii)  cannot be redeemed within 5 years from the date of its issue;
               or

   (b)  a debt instrument that-

        (i)    is issued on or after 5 March 2003;

        (ii)   has an original maturity of less than 7 years but not less than
               3 years or is undated; and

        (iii)  can be redeemed within 7 years from the date of its issue but
               not within the first 3 years. (Added 34 of 2003 s. 3)

(5) For the purposes of the definition of "debt instrument" in subsection (4),
the Financial Secretary may by order-

   (a)  declare that the provisions relating to a credit rating mentioned in
        paragraph (b) of that definition do not apply;

   (b)  fix an amount of minimum denomination different from the amount
        mentioned in paragraph (d)(i) or (ii), as the case may be, of that
        definition, (Amended L.N. 90 of 1999 and 44 of 1999 s. 11) in respect
        of a debt instrument issued by such person as may be specified in the
        order. (Added 25 of 1996 s. 2. Amended 34 of 2003 s. 3 )
        ___________________________________________________________________________
        __ Note: The amendments made by 34 of 2003 to section 14A(1)(a) and
        (b), (4) and

(5) apply in relation to the year of assessment commencing on 1 April 2003 and
to all subsequent years of assessment. (Please see 34 of 2003 s. 2)

"debt instrument" (債務票據) “medium term debt instrument”
(中期債務票據)