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[Hong Kong] FAQ Tax Reserve Certificates (TRCs)

Q: Q1: What is TRCs?

A: TRCs is tax assessment is under objection. The Commissioner may instruct tax payer to purchases of a TRC of a specified amount. The sum of purchased will be apply to settle the tax dispute or repaid to the taxpayer depending on the final assessment of the objection or appeal.

Q: Q2: When I purchased TRCs, any interest received for the certificates?

A: Yes, TRCs can receive interest from the date of purchases to the date of payment of tax. The certificates bear simple interest and interest is calculated monthly base. Interest only credited when certificates are used for tax pay. However, no interest calculation when repaid to its holder. Hong Kong Government Gazette published on 2 June 2023 contains a Legal Notice to the effect that the Secretary for Financial Services and the Treasury has authorised a change in the rate of interest payable on Tax Reserve Certificates. From 5 June 2023, the new annual rate of interest will be 0.8083 per cent against the current rate of 0.7667 per cent, i.e. the new rate will be HK$0.0674 per month per HK$100.

Q: Q3: Do I need to inform Inland Revenue Department (IRD) if I wish to redeem TRCs in my account for settlement of tax liabilities?

A: TRCs is under the Electronics Tax Reserve Certificates Scheme. The certificates shall be redeemed automatically on a First-In-Frist-Out basis to settle of tax liabilities. When before tax due date before 2 weeks, IRD shall send a “proposal for redemption” to Tax Payer showing the details of certificates intend to redeemed and any shortfall.

Q1: What is TRCs?

TRCs is tax assessment is under objection. The Commissioner may instruct tax payer to purchases of a TRC of a specified amount. The sum of purchased will be apply to settle the tax dispute or repaid to the taxpayer depending on the final assessment of the objection or appeal.

Q2: When I purchased TRCs, any interest received for the certificates?

Yes, TRCs can receive interest from the date of purchases to the date of payment of tax. The certificates bear simple interest and interest is calculated monthly base. Interest only credited when certificates are used for tax pay. However, no interest calculation when repaid to its holder.

Hong Kong Government Gazette published on 2 June 2023 contains a Legal Notice to the effect that the Secretary for Financial Services and the Treasury has authorised a change in the rate of interest payable on Tax Reserve Certificates. From 5 June 2023, the new annual rate of interest will be 0.8083 per cent against the current rate of 0.7667 per cent, i.e. the new rate will be HK$0.0674 per month per HK$100.

Q3: Do I need to inform Inland Revenue Department (IRD) if I wish to redeem TRCs in my account for settlement of tax liabilities?

TRCs is under the Electronics Tax Reserve Certificates Scheme. The certificates shall be redeemed automatically on a First-In-Frist-Out basis to settle of tax liabilities. When before tax due date before 2 weeks, IRD shall send a “proposal for redemption” to Tax Payer showing the details of certificates intend to redeemed and any shortfall.