HMRC removed Hong Kong from its list of sanctioned locations for QROPS products after a report revealed that Hong Kong’s own pension rules were being contravened. HMRC softened the blow by removing a 55% tax charge on unauthorised pension withdrawals.
This year the UK tax authorities introduced a rule to specifically deal with the problem of expats drawing from a Hong Kong QROPS therefore paying income tax at just 15% rather than the higher UK rates. The problem had arisen due to the loose wording of the Double Taxation Agreement between Hong Kong and the UK.
Hong Kong QROPS are set to become a favoured choice rivalling Malta, Isle of Man and other popular QROPS destinations due to the specific characteristics of the Hong Kong financial system.
One of the key strengths of the Hong Kong market is that it has Double Taxation Agreements with many countries around the world which is not something that many offshore centres can boast.
Hong Kong QROPS can also offer 30% of the transferred value as a tax free lump sum. It is also possible to avoid the 55% tax charge on death which would be levied in the UK.