On 27 July 2026, Hong Kong's Financial Services and the Treasury Bureau (FSTB) and the Inland Revenue Department (IRD) launched a six-week public consultation on a major revamp of the tax concession regime for corporate treasury centres (CTCs). The consultation, open until 4 September 2026, is the first legislative step under the Action Plan to Promote the Development of CTCs in Hong Kong unveiled in June 2026.

What is changing?

The government is proposing a two-tier regime for CTC tax concessions.

Tier 1 would refine and broaden the existing rules for qualifying corporate treasury centres (QCTCs) and intra-group financing businesses. Key proposals include:

- Deferring tax deductions on interest paid to an offshore associated corporation until that corporation becomes taxable on the interest income;
- Expanding the range of corporations eligible for interest-expense deductions to cover entities conducting corporate treasury activities; and
- Clarifying legal and administrative definitions, such as the substantial activity requirement, the intra-group financing benchmark and the definition of corporate treasury transactions.

Tier 2 introduces a pre-approval mechanism. CTCs and associated corporations that meet specified conditions may apply to the IRD for a five-year approval, granting additional benefits:

- Exemption from the "dedicated CTC condition" and the "safe harbour rule" for pre-approved QCTCs;
- A 50% tax exemption on interest income received by pre-approved Hong Kong associated corporations from the pre-approved QCTC;
- Exemption from the "subject to tax condition" on interest paid to pre-approved non-Hong Kong associated corporations; and
- Removal of the anti-tax arbitrage rule for pre-approved Hong Kong associated corporations, allowing full deduction of expenses paid to the pre-approved QCTC, capped at 30% of EBITDA for interest expense deductions.

Why this matters for businesses

The consultation is part of Hong Kong's "4T" framework: tax revamp, tax agreements, targeted promotions, and talent and dialogue. The goal is to attract more multinational corporations to set up CTCs in Hong Kong and to help existing centres scale up.

For companies already operating in Hong Kong, or considering Hong Kong company registration, the proposals offer clearer tax certainty and stronger incentives to centralise treasury functions in the city. If adopted, the changes would strengthen Hong Kong's position as a regional hub for cash management, intra-group financing and risk management.

Timeline and next steps

FSTB and IRD are accepting written submissions by post or by email to ctc-consult@fstb.gov.hk until 4 September 2026. After reviewing feedback, the government aims to issue administrative clarifications later this year and introduce legislative amendments to the Legislative Council in the first half of 2027.

Conclusion

The 27 July 2026 consultation signals a clear policy direction: Hong Kong intends to make its CTC tax regime more competitive and flexible. While the proposals are still under consultation, businesses planning to register or expand in Hong Kong should monitor the legislative timeline and assess how the two-tier regime could support their regional treasury strategies.