### Inland Revenue Ordinance 《稅務條例》

14S. Calculation of net payments of finance charges or interest for funding leases
(Amended 10 of 2022 s. 2)(1) If section 14P(1) applies to a corporation for a year of assessment, and the qualifying ship leasing activity concerned relates to a funding lease, then the assessable profits of the corporation derived from the activity for that year of assessment are calculated in accordance with this section.
(2) The net payments of finance charges or interest in relation to the right to use a ship under the funding lease are to be calculated in accordance with the following formula—

E = F – G

where:  E  means the net payments of finance charges or interest;     F  means the aggregate amount of the gross payments of finance charges or interest (whether or not they are periodic payments) earned by or accrued to the corporation under the funding lease during the basis period for the year of assessment; and     G  means the aggregate amount of any outgoings and expenses deductible under this Part to the extent to which they are incurred during the basis period for the year of assessment by the corporation in the production of those gross payments of finance charges or interest. 
(3) If a ship is leased under the funding lease together with other dealings in pursuance of one bargain, then for calculating the net payments of finance charges or interest under subsection (2), the Commissioner must, having regard to all the circumstances of the bargain, allocate an amount of gross payments of finance charges or interest in relation to the right to use the ship under the lease.
(4) The outgoings and expenses taken into account in calculating the net payments of finance charges or interest under this section may not otherwise be claimed for deduction under this Part.
(Added 5 of 2020 s. 5)

### Inland Revenue Ordinance 《稅務條例》

14T. Concession for qualifying ship leasing manager
(Amended 10 of 2022 s. 2)(1) For the purposes of this Part and subject to subsections (5) and (7), the assessable profits of a corporation that is a qualifying ship leasing manager for a year of assessment are chargeable to tax under this Part at—
(a) to the extent to which those profits are assessable profits derived from its qualifying ship leasing management activity carried out other than for an associated corporation—one-half of the rate specified in Schedule 8; or
(b) to the extent to which those profits are assessable profits derived from its qualifying ship leasing management activity carried out for an associated corporation—the rate specified in Schedule 8C.
(2) A ship leasing manager is a qualifying ship leasing manager for a year of assessment if—
(a) during the basis period for that year of assessment, it is not a ship operator; and
(b) for that year of assessment—
(i) it satisfies the conditions specified in subsection (3);
(ii) it satisfies the safe harbour rule under section 14U; or
(iii) it has obtained the Commissioner’s determination under section 14V(1).
(3) For the purposes of subsection (2)(b)(i), the conditions are that, during the basis period for the year of assessment, the ship leasing manager—
(a) has carried out in Hong Kong one or more qualifying ship leasing management activities; and
(b) has not carried out in Hong Kong any activity other than a qualifying ship leasing management activity.
(4) For the purposes of subsection (3)(b), in determining whether a ship leasing manager has carried out any activity other than a qualifying ship leasing management activity, only activities that generate income to the ship leasing manager are to be taken into account.
(5) Subsection (1) applies to a corporation for a year of assessment only if—
(a) during the basis period for that year of assessment—
(i) the central management and control of the corporation is exercised in Hong Kong;
(ii) the activities that produce its qualifying profits for that year are—
(A) carried out in Hong Kong by the corporation; or
(B) arranged by the corporation to be carried out in Hong Kong; and
(iii) those activities are not carried out by a permanent establishment outside Hong Kong; and
(b) the corporation has elected in writing that subsection (1) applies to it.

Note—
See also section 14W.
(6) An election under subsection (5)(b), once made, is irrevocable.
(7) If subsection (1) does not apply to a corporation for a year of assessment (cessation year

### Inland Revenue Ordinance 《稅務條例》

14U. Safe harbour rule—ship leasing
(Amended 10 of 2022 s. 2)(1) For the purposes of section 14T(2)(b)(ii), a corporation satisfies the safe harbour rule for a year of assessment (subject year

14V. Commissioner’s determination—ship leasing
(Amended 10 of 2022 s. 2)(1) For the purposes of section 14T(2)(b)(iii), the Commissioner may, on application by a corporation, determine that the corporation is a qualifying ship leasing manager for a year of assessment.
(2) A corporation may apply for the Commissioner’s determination under subsection (1) only if—
(a) it is not a ship operator; and
(b) for the year of assessment, it satisfies neither of the following—
(i) the conditions specified in section 14T(3);
(ii) the safe harbour rule under section 14U.
(3) The Commissioner may make a determination under subsection (1) only if the Commissioner is of the opinion that the conditions specified in section 14T(3), or the safe harbour rule under section 14U, would, in the ordinary course of business of the corporation, have been satisfied for the year of assessment.
(Added 5 of 2020 s. 5)

### Inland Revenue Ordinance 《稅務條例》

14W. Carrying out of activities in Hong Kong—ship leasing
(Amended 10 of 2022 s. 2)(1) For the purposes of section 14P(4)(a)(ii), an activity producing the assessable profits of a corporation that fall within section 14P(1) for a year of assessment is not considered to be carried out in Hong Kong by the corporation or arranged by the corporation to be carried out in Hong Kong during the basis period for that year of assessment unless the threshold requirements are met.
(2) For the purposes of section 14T(5)(a)(ii), an activity producing the assessable profits of a corporation that fall within section 14T(1) for a year of assessment is not considered to be carried out in Hong Kong by the corporation or arranged by the corporation to be carried out in Hong Kong during the basis period for that year of assessment unless the threshold requirements are met.
(3) To avoid doubt, the fact that the threshold requirements are not met for the purposes of subsection (1) or (2) does not imply that the assessable profits mentioned in that subsection do not arise in or are not derived from Hong Kong.
(4) In this section—
threshold requirements (門檻要求) means—(a) for the purposes of subsection (1)—the requirements prescribed in section 5 of Schedule 17FA; or
(b) for the purposes of subsection (2)—the requirements prescribed in section 6 of that Schedule.

(Added 5 of 2020 s. 5)

14X. Losses sustained by qualifying ship lessor or qualifying ship leasing manager
(Amended 10 of 2022 s. 2)(1) If section 14P(1) applies to a corporation for a zero-tax year of assessment, any loss sustained by the corporation in the year of assessment is not available for set off against any of its assessable profits for any subsequent year of assessment.
(2) If section 14T(1)(b) applies to a corporation for a zero-tax year of assessment, any loss sustained by the corporation in the year of assessment is not available for set off against any of its assessable profits for the year of assessment or any subsequent year of assessment.
(3) In this section—
zero-tax year of assessment (零稅率課稅年度) means a year of assessment for which the rate of profits tax specified in Schedule 8C is 0%.
(Added 5 of 2020 s. 5)