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Taxation Legislation

Locality of Profits

January 13, 2010

In December 2009, the Inland Revenue Department published the revised Departmental Interpretation and Practice Note No.21 (Revised) – “Locality of Profits”.
The determination of the location of a source of a given profit has caused some disputes between taxpayers and the Inland Revenue Department.  It is clear that the source of a profit is “what the [...]

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Why an Audit?

January 11, 2010

One of the more frustrating aspects of Hong Kong company law is that all Hong Kong-incorporated companies require an audit, irrespective of the value of the company’s turnover, the number and nature of its shareholders etc.  By comparison, a Singapore Exempt Private Company, i.e. a company with not more than 20 shareholders (none of whom [...]

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2010 Budget Wish List

November 9, 2009

With Hong Kong’s budget only four months away, give or take a few weeks, now is the time to make your own views known to the Financial Secretary, Mr John Tsang.
People may consider this a futile exercise, but in my opinion this is far from being the case.  The 2009 budget lacked substance, or at [...]

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Why Reduce The Tax Rate?

October 6, 2009

I read with interest that the Hong Kong General Chamber of Commerce believes that it is essential to reduce the rate of profits tax, the tax on business profits, to 15% in order to enhance Hong Kong’s competitive position. I question whether a reduction in the rate of profits tax is that important in [...]

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US tax snoops zero in on Hong Kong? Let’s be realistic.

September 28, 2009

Nick Westra’s article in this week’s Sunday Morning Post (September 27th, 2009) must have pleased the IRS.  If anything is going to raise concern amongst US citizens living in Hong Kong it is exactly this type of suggestion that a foreign authority will have unrestricted access to information.  The article appears to ignore the fact [...]

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Datatronic Limited Saga Part2 – Manufacturers Claim Hundreds of Firms Hit by Unfair Tax Rule

September 25, 2009

I refer to Mr Sun’s comments in Denise Tang’s article “Manufacturers claim hundreds of firms hit by unfair tax rule” published in the Wednesday 23rd September edition of the South China Morning Post.
I whole heartedly support Mr Sun’s views and indeed I have been very frustrated with the Inland Revenue Department’s (“the Department”) intransient stance [...]

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Expat trapped in Hong Kong

September 25, 2009

Is it time for Hong Kong to overhaul its tax collection methods? Multi million dollar losses suggest it is.

The article, ‘Expat Trapped in Hong Kong over unpaid tax bill’ that appeared in last week’s issue of The Sunday Morning Post highlighted an interesting problem for the Hong Kong Inland Revenue Department.
The piece tells the story [...]

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Who is required to file a Hong Kong Profits Tax return?

August 31, 2009

I am frequently asked, primarily by overseas companies, under what circumstances a company, whether registered in Hong Kong or in an overseas jurisdiction, is required to file a Hong Kong profits tax return and to have its annual accounts audited.
Under Section 51 Inland Revenue Ordinance, an assessor may issue a profits tax return to any [...]

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Hong Kong’s anti-avoidance provisions

August 27, 2009

The judgement by Mr Justice Ribeiro PJ in the Court of Final Appeal case of Ngai Lik Electronics Company Limited and the Commissioner of Inland Revenue provides very clear guidance as to the correct approach to take when applying Hong Kong’s general anti-avoidance legislation, Section 61A Inland Revenue Ordinance.
Mr Justice Ribeiro PJ criticised the approach [...]

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Court of Appeal ‘Disregarded the Board of Review’ Findings on Fact in Inland Revenue vs Datatronic Limited case

July 29, 2009

The recent decision by the Court of Appeal in the case of Commissioner of Inland Revenue and Datatronic Limited, handed down on 15th July 2009, in favour of the Commissioner of Inland Revenue may not have come as a surprise to some but will undoubtedly be a cause of concern to others.  (The facts of [...]

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