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Offshore Profits – Re-invoicing Trough Hong Kong

October 26, 2010

The change in practice by the Inland Revenue Department (“the Department”) regarding the assessment of profits booked in a re-invoicing vehicle located in Hong Kong continues to be a cause for concern.
Paragraph 27 of the Departmental Interpretation and Practice Notes No.21 (Revised), dated December 2009 (“DIPN”), clearly states that it is [...]

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2011-2012 BUDGET SUBMISSIONS

October 7, 2010

We are rapidly approaching the time of year when the various professional bodies, chambers of commerce, business associations etc. need to consider the content of their submissions to the Financial Secretary, The Hon John Tsang Chun-wah, on the Government’s budget for the fiscal year 2011-12.
Having been involved in this process [...]

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Hong Kong Issues Guidelines on the Exchange of Tax Information

June 22, 2010

On June 9, 2010, the Inland Revenue Department (“the Department”) published its Departmental Interpretation and Practice Note No 47 “Exchange of Information under Comprehensive Double Taxation Agreements”. Although, as I have previously noted, the Department does not feel bound by its own Practice Notes, they nonetheless provide genuine guidance as to the normal Departmental [...]

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Hong Kong / Austria CDTA – Double Taxation Treaty Update

June 22, 2010

Hong Kong concluded a Comprehensive Double Taxation Agreement (“CDTA”) with Austria on May 25, 2010.  This is Hong Kong’s 11th CDTA, and provides for the reduction of withholding tax on dividends to 0% if the beneficial owner is a company that directly holds at least 10% of the capital of the [...]

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Comprehensive Double Taxation Agreement Number 10 – Switzerland

April 20, 2010

The Hong Kong Inland Revenue Department (“IRD”) continues its drive to conclude the magical 12 CDTAs required by the OECD in order for it to be taken off the watch-list of countries/jurisdictions with unacceptable exchange-of-information policies.  On April 15, 2010, the IRD stated on its website:
“On 15 April 2010, Hong Kong [...]

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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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Misled By The Inland Revenue Department?

November 18, 2009

When I arrived in Hong Kong in the early 1980’s obtaining a copy of the Inland Revenue Department’s Assessor’s Manual was considered essential, but extremely difficult to acquire.  Gradually the Assessor’s Manual has been replaced by a series of Departmental Interpretation and Practice Notes (DIPNs).  Whereas the Assessor’s Manual had [...]

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Source of Profits – DIPN 21 Needs Amendment

October 22, 2009

Disagreements between the Inland Revenue Department (“the Department”) and taxpayers as to whether a particular source of profit accruing to a business carried on in Hong Kong is derived from Hong Kong, and therefore taxable, arise all to frequently. It would be foolish to believe that this uncertainty is ignored by persons contemplating establishing [...]

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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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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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