Update no. 262 relates to the publication of Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (amendments to Hong Kong Accounting Standard 12 Income Taxes).
Invitation to comment
The Institute is seeking comments on the International Accounting Standards Board (IASB) Exposure Draft ED/2021/6 Management Commentary by 8 October.
Recordings of IASB webinars on the Exposure Draft Disclosure Requirements in IFRS Standards – A Pilot Approach
Recordings of the webinars on the IASB Exposure Draft ED/2021/3 Disclosure Requirements in IFRS Standards – A Pilot Approach are now available on the IASB’s YouTube channel. They cover the IASB’s proposals in developing disclosure requirements in International Financial Reporting Standards (IFRS) and new disclosure requirements for IFRS 13 Fair Value Measurement and International Accounting Standard (IAS) 19 Employee Benefits. The recording of the first webinar, providing an overview of the exposure draft and the second webinar will cover detailed and particular aspects of the proposed approach, such as comparability, enforceability and electronic reporting.
Members can submit their comments on the exposure draft to the Institute by 31 August.
Recordings of IASB presentations
Recordings are now available of the two presentations delivered by the IASB to attendees of the European Accounting Association Virtual Congress. The recordings provide an overview of the IASB Request for Information Third Agenda Consultation as well as progress of other projects. The Institute is seeking comments on the request for information by 10 August.
IFRS Interpretations Committee agenda decisions
The IFRS Interpretations Committee published two agenda decisions on
- IFRS 9 Financial Instruments covering hedging variability in cash flows due to real interest rates.
- IAS 19 Employee Benefits covering the periods of service to which an entity attributes benefit for a particular defined benefit plan.
May IASB update and podcast
The May IASB Update, highlighting the tentative decisions reached at the IASB monthly meeting, and the May podcast, focusing on the IASB discussions at its monthly meeting, are now available.
Speech by the IASB Chair
Hans Hoogervorst, Chair of the IASB, delivered a speech at the IFRS Foundation Virtual Conference 2021 reflecting how IFRSs have evolved during his 10-year tenure and the importance of independent standard setting.
Auditing and assurance
Invitation to comment
The Institute is seeking comments on the International Auditing and Assurance Standards Board (IAASB) Survey Consultation, the IAASB’s Work Plan for 2022-2023 by 5 July.
Webinars on quality management standards
The IAASB and the International Federation of Accountants (IFAC) will hold a series of webinars on International Standard on Quality Management 1 Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements via Zoom, including question and answer sessions. Recordings will be available on the IAASB’s YouTube channel afterwards. Register now for webinars on 29 July, 5 August and 18 August.
Webinar on climate risk in statutory audit
Join the Institute of Chartered Accountants in England and Wales’ webinar on 12July on climate risk in the statutory audit. It considers how auditors are taking account of climate-related risks and offers practical tips for improving audit quality in this area.
IAASB auditor post-implementation review feedback statement
The IAASB published a feedback statement after its post-implementation review of auditor reporting. It summarizes the key themes and views shared by respondents as well as a roundtable discussion held in September 2020.
The Institute’s Auditing and Assurance Standards Committee meeting minutes
Minutes of the meeting held in April is now available.
IAASB May board meeting
The audio recording of the IAASB May board meeting is now available.
Ethical leadership in an era of complexity and digital change
Read the event highlights of a global roundtable exploring how professional accountants continue to add value in the digital world. A recording of the spark sessions and breakout discussion debriefs is also available.
IFRS Foundation Trustees webinar update on sustainability project
The IFRS Foundation Trustees invite interested stakeholders to register for live webinars on 7 July, which will provide an update on the work on setting up a proposed International Sustainability Standards Board. The webinars will summarize the feedback gathered during the Trustees’ 2020 Consultation and outline the Trustees’ strategic decisions and the remaining steps before the Trustees make a final determination on the new board by the United Nations COP26 conference in November.
IFRS Foundation response to G7 finance ministers’ communique regarding global sustainability standards
The IFRS Foundation provided comments on the communique issued by the G7 finance ministers that referenced ongoing work of the Trustees to consider the formation of a new sustainability board within the governance structure of the IFRS Foundation.
IFRS Foundation establishes Eminent Persons Group
The IFRS Foundation has established an Eminent Persons Group to provide strategic advice and counsel to the Trustees on the proposed formation of the International Sustainability Standards Board and its connectivity with jurisdictional initiatives. Its work complements other working groups and committees established to support the IFRS Foundation’s determination of its role in sustainability-related financial disclosures. The Institute is seeking comments on the IFRS Foundation Exposure Draft ED/20215 Proposed Targeted Amendments to the IFRS Foundation Constitution to Accommodate an International Sustainability Standards Board to Set IFRS Sustainability Standards by 2 July.
Institute submission on HKEX consultation on listing regime for overseas issuers
The Institute issued a submission in response to the consultation paper published by Hong Kong Exchanges and Clearing Limited (HKEX) seeking public feedback on proposals to enhance and streamline the listing regime for overseas issuers.
The Institute’s Corporate Finance Advisory Panel generally supports the underlying aims of the proposals to address the fragmented and, to some extent, inconsistent regulatory requirements for different kinds of overseas issuers. However, there are reservations about proposals to allow grandfathered overseas issuers with non-compliant weighted voting rights and/or variable interest entity structures to apply for dual primary listing directly on the Hong Kong Stock Exchange and for these companies, and also companies with a secondary listing in Hong Kong, to retain their non-compliant structures even if they are de-listed from the exchange where they have a dual primary or primary listing. The concern is that this would create different regulatory regimes for different issuers with primary listings in Hong Kong, depending on whether they were listed only in Hong Kong at the outset or originally held a primary listing or dual primary listing on an overseas exchange.
HKEX’s consultation conclusions on Main Board profit requirement
On 20 May, HKEX released consultation conclusions on the Main Board profit requirement (MBPR). In particular, there will be a 60 percent increase in the MBPR to HK$80 million over the three-year trading record period and the profit spread will be revised. This is substantially reduced from the original proposals in the consultation paper of either a 150 percent or 200 percent increase in the minimum aggregate profit requirement. Please refer to the press release for details. The new requirements will take effect from 1 January 2022.
Please also refer to the Institute’s submission, objecting to HKEX’s proposal to increase the minimum MBPR.
HKEX’s consultation conclusions on Review of Listing Rules Relating to Disciplinary Powers and Sanctions
HKEX also released consultation conclusions on the Review of Listing Rules Relating to Disciplinary Powers and Sanctions. To summarize, HKEX will implement all the proposals relating to disciplinary powers and sanctions, with minor modifications, to bring disciplinary actions against a broader range of individuals. Please refer to the press release for details. The new rules will take effect on 3 July 2021.
Please also refer to the Institute’s submission. While HKEX will proceed to extend a broader range of possible sanctions to professionals as well as listed companies, their directors and senior management, it is made clear in a note to the new rules (Rule 2A. 10B(3)) that sanctions are subject to the existing arrangements between the HKEX and professional regulatory bodies – including the Institute.
HKSAR and Mainland sign record of meeting concerning mutual recognition of and assistance to insolvency proceeding
The Secretary for Justice of the Hong Kong Special Administrative Region (HKSAR) Government and the Vice-President of the Supreme People's Court signed the record of meeting concerning mutual recognition of, and assistance to, insolvency proceedings between the courts of the Mainland and the HKSAR. Please refer to the press release for details.
This signing comes after discussions between the HKSAR Department of Justice (DoJ) and the Mainland authorities. Some Restructuring and Insolvency Faculty (RIF) Executive Committee members assisted the DoJ and the RIF also submitted information on practical issues faced by Hong Kong insolvency practitioners working in the Mainland.
Read more in this month's Thought Leadership here.
Annual meeting with the IRD
The annual meeting between representatives of the Institute's Taxation Faculty Executive Committee and the IRD took place on 14 May. At the meeting, the IRD confirmed the extended due dates for lodging profits tax returns for the year of assessment 2020/21. These are:
Convenience of eTAX
The Inland Revenue Department (IRD) encourages taxpayers to consider filing their tax return through the IRD’s eTAX gateway to enjoy personalized online tax services. To save paper, taxpayers can select to receive electronic notices and documents.
Announcements by the IRD
Members may wish to be aware of the following matters:
- Passage of Inland Revenue (Amendment) (Miscellaneous Provisions) Bill 2021. This bill implements four areas of amendments to the Inland Revenue Ordinance: (i) the tax treatment for amalgamation of companies under the court-free procedures as provided for under the Companies Ordinance; (ii) the tax treatment for transfer or succession of specified assets under certain circumstances; (iii) refining the statutory framework for the furnishing of tax returns, including paving the way for an expansion of e-filing; and (iv) enhancing the foreign tax deduction regime. The amendments will come into operation on 11 June. Amendments in relation to foreign tax deduction will take effect from the year of assessment 2021/22.
- Interest on Tax Reserve Certificates.
- Legislative Council question on pursuing development in the Mainland cities of the Guangdong-Hong Kong-Macau Greater Bay Area.
- Legislative Council question on re-industrialization in Hong Kong.
- Legislative Council question on profits tax.
- Enhanced employer’s application services – e-Application for preparation of IR56 Form(s) by using employer’s self-developed software.
- Tax obligations of taxpayers and employers.
- Online Appointment Booking for Stamp Office Lease Counter Service.
- Stamp Duty statistics.
Legislation and other initiatives
Consultation conclusions on Legislative Proposals to Enhance Anti-Money Laundering and Counter-Terrorist Financing Regulation in Hong Kong
On 21 May, the Financial Services and the Treasury Bureau released consultation conclusions on the legislative proposals to enhance anti-money laundering and counter-terrorist financing regulation in Hong Kong. Please refer to the press release for details.
Please also refer to the Institute’s submission for your information.
Announcements by the government
Members may wish to be aware of the following matters:
- Government further tightens quarantine and testing arrangements for persons arriving from Taiwan and Singapore.
- Target date of inaugural flights under Hong Kong-Singapore Air Travel Bubble deferred.
- Government gazettes compulsory testing notice and specifications under Prevention and Control of Disease (Compulsory Testing for Certain Persons) Regulation.
- Government announces enhanced anti-epidemic measures for designated quarantine hotels.
- Government extends social distancing measures under Prevention and Control of Disease Ordinance.
- Government adjusts testing requirements for certain persons arriving at Hong Kong.
- Government adjusts boarding and quarantine requirements for persons arriving from certain places.
United Nations Sanctions (Yemen) Regulation 2019 (Amendment) Regulation 2021 was gazetted on 28 May.
For the current lists of terrorists, terrorist associates and relevant persons/ entities under United Nations sanctions, members should refer regularly to the Institute’s AML webpage. Other useful documents and guidance can also be found on the same page.
Please refer to the full versions of Technical News on the Institute’s website: www.hkicpa.org.hk