The Asia-Pacific Journal of Taxation (APJT) is a joint effort between the Taxation Institute of Hong Kong and the School of Accounting and Finance of The Hong Kong Polytechnic University.

It publishes research papers, commentary notes, book reviews and articles that address significant issues in the field of taxation relevant to Hong Kong, China and the Asian Pacific region.

The APJT aims to provide quality service to the readership by making its content ore informative and thorough, and by striking a proper balance between professionalism and intellectual stimulation.

The APJT normally publishes two issues every year.

Feature Articles

HK Technical Column(s)
Volume 24, Number 2
A Review of Recent Board of Review Cases (Dec 2020)


Joint Editors

Jody Wong
The Hong Kong Polytechnic University
Percy Wong
The Hong Kong Polytechnic University
Philip Hung
The Taxation Institute of Hong Kong
Webster Ng
The Taxation Institute of Hong Kong
Anita Tsang
The Taxation Institute of Hong Kong

Editorial Consultants

Agnes Cheng
The Hong Kong Polytechnic University
Nigel Eastaway
MHA MacIntyre Hudson
Michael Olesnicky
Baker & McKenzie, HK
Charles Swenson
University of Southern California, USA
Daniel Thornton
Queen's University, Canada
Jefferson VanderWolk
Squire Patton Boggs, USA
Marcellus Wong
AMTD Group

Editorial Board Members

Brian Andrew
University of Wollongong
Wilson Cheng
Ernst & Young Tax Services Limited
Cheng Chi
KPMG, China
Sarah Chin
Deloitte Touche Tohmatsu, HK
Jeremy Choi
PricewaterhouseCoopers, HK
Spencer Chong
PricewaterhouseCoopers, HK
Wilson Chow
The University of Hong Kong
Daniel Ho
Hong Kong Baptist University
Patrick Ho
FTMS Training System Limited
Betty Kwok
The Hang Seng University of Hong Kong
Simon James
University of Exeter
Jeyapalan Kasipillai
Monash University Malaysia
Patrick Kwong
Ernst & Young Tax Services Limited
Stephen Lee
Sinotax Services Limited
Thomas Lee
Thomas Lee & Partners
Tak Yan Leung
Open University of Hong Kong
Aldous Mak
Hong Kong Institute of Vocational Education (Haking Wong)
Kelvin Mak
Hong Kong University of Science and Technology
Poh Eng Hin
Nanyang Technology University
Anthony Tam
Kalloe Vinod
KPMG, Netherlands
Fergus Wong
PricewaterhouseCoopers, HK
Chris Xing
KPMG, China
Eugene Yeung
KPMG, China

Letters From The Editors

Governments around the world continued to focus on fighting the COVID-19 pandemic in the second half of 2020. For the HKSAR Government, as for many other governments, the most imminent task is tiding the working population and enterprises (especially small and medium sized enterprises) over the current economic situation and revitalising the economy once the pandemic is over. In Hong Kong, the government has launched a few rounds of relief measures totalling around HK$318 billion under the Anti-Epidemic Fund and other related measures since February 2020 to assist affected industries and the public. Relief measures on such a scale inevitably create pressure on the financial position of the government. The government has estimated that there will be an unprecedented fiscal deficit of more than HK$300 billion in the 2020/21 financial year and that fiscal deficit will continue in the budget for the 2021/22 financial year.


The HKSAR Government launched the public consultation for the 2021/22 Budget on 20 December 2020. The 2021/22 Budget will be announced on 24 February 2021. As in previous years, the Institute will make a budget submission to the government setting out its proposed tax measures for the government’s consideration.


Looking back over the past six months, a number of tax measures were introduced in Hong Kong. These measures included a concessionary tax regime for the ship leasing industry (with a reduced profits tax rate of 0% or 8.25%), expanding the scope of the current concessionary tax regime for the insurance sector to cover more insurance-related businesses (not yet effective), removing the double ad valorem stamp duty on the transfer of non-residential property in Hong Kong, and waiving the stamp duty on stock transfers payable by the exchange traded fund (ETF) market makers in the course of allotting and redeeming ETF units listed in Hong Kong.


On the international front, the Organisation for Economic Cooperation and Development published the blueprints on Pillar One and Pillar Two of the BEPS 2.0 project in October 2020. The blueprints set out in detail the technical design of various components of Pillar One and Pillar Two but noted that no agreement has yet been reached among the members of the Inclusive Framework on BEPS. The proposed new international taxation rules under the two pillars, in particular under Pillar Two, could significantly affect the attractiveness of the offshore regime and existing tax incentives in Hong Kong. In this regard, the HKSAR Government formed an Advisory Panel on BEPS 2.0 in June 2020. The panel is reviewing the impact of BEPS 2.0 on the competitiveness of Hong Kong’s business environment and will advise the government on strategies and measures to facilitate the sustainable development of Hong Kong.


This issue of the Journal contains a variety of articles contributed by authors specialising in different areas of taxation. In the Hong Kong Technical column, in addition to the usual review of recent Board of Review cases, there are two articles: 1) an article examining the provisions governing the taxing and spending powers of the HKSAR Government in the budgetary process under the Basic Law and 2) an article discussing the evolving practices of the Hong Kong Inland Revenue Department on reviewing the tax exemption status for charities and the strategies to be adopted by charities in dealing with tax disputes. The article in the PRC column examines the implications of the electronic special VAT invoice system for the operations of enterprises in China. The International column contains the following three articles: 1) an article discussing whether multinational enterprises (MNEs) need to review and modify their transfer pricing policies in the context of the COVID-19 crisis, in particular, whether single-function limited risk entities within an MNE group could have a guaranteed profit or incur a loss in 2020 from a transfer pricing perspective; 2) an article exploring how business ethics and corporate social responsibility may reshape the transfer pricing policies of MNE groups with cross-border businesses in light of BEPS 2.0; and 3) an article providing an update on BEPS 2.0 developments, focusing on Pillar Two, with a summary of the proposed rules and a discussion of various issues that organisations may wish to consider.


We would like to express our heartfelt thanks to the authors for contributing these insightful articles. Our special thanks go to the reviewers for their valuable comments. Last but not least, we wish to thank our readers for their continued support. We hope you will enjoy reading the Journal. We welcome any comments and suggestions to improve its content and quality. If you wish to voice your views and suggestions on any tax matters, be they policy issues or practical matters, you are welcome to submit your letter to the editors.


The Joint Editors


December 2020