32.
However, to reflect better our legislative intent, the Commissioner of Inland Revenue will issue a Practice Note to clarify issues relating to the application of the "associate" restriction and the interpretation of the term "non-resident" as requested by the various parties concerned.
We also note the concern of various parties that section 20AB as proposed in the Bill, which is modelled on legislation in the United Kingdom and sought to provide a specific tax exemption for certain income derived from bona fide offshore funds managed in Hong Kong, is not easy to follow and instead of achieving its objective, it may complicate the existing tax system in this area. We have reviewed the approach and concluded that a simpler way to achieve the policy objective and to reflect our legislative intent is to amend existing section 26A(1A) of the Inland Revenue Ordinance to extend the present tax exemption under the section to cover also mutual fund corporations and unit trusts established outside Hong Kong or similar collective investment schemes, provided that the Commissioner of Inland Revenue is satisfied that the mutual fund corporation, unit trust or collective investment scheme is a bona fide widely held investment vehicle which complies with the requirements of a supervisory authority within an acceptable regulatory regime. We are pleased to note that this revised approach is welcomed by the various parties concerned. I will move amendments at Committee Stage to delete the proposed section 20AB and replace it with a new clause to this effect.
No prior approval from the Commissioner is necessary for an individual investment vehicle to qualify for the proposed tax exemption under section 26A(1A) provided that the requirements as stipulated in this Bill are satisfied. The Commissioner is prepared to give advance ruling if there is doubt in individual cases. The Commissioner will also issue a Practice Note to clarify the interpretation of such terms as "supervisory body" and "acceptable regulatory regime" under the Bill.
Thank you, Mr Deputy President.
End