Result(s):

Total record found: 155 article(s)
A Review of Recent Board of Review Cases (July 2020)
  • Volume 24, Number 1
  • HK Technical Column(s)
Description

This article reviews the cases reported in Volume 34 and the first supplement of Volume 34 of Board of Review Cases, which were published in December 2019 and March 2020, respectively. There are eight profits tax cases, one salaries tax case, and five penalty tax cases reported. Regarding the eight profits tax cases, three concern property disposal, two concern source of profits, two concern deductibility of expenses, and one concerns appeal out of time. The Board ordered costs in all but one of the penalty cases because of the incompetency of the professional advisors involved. In
two of the penalty cases, the Board expressed that if it were not for the need for confidentiality, the cases would have been referred to the relevant professional bodies for disciplinary investigation due to the incompetency of the representatives or the professional misconduct of the taxpayer.

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Mainland China Issued Individual Income Tax Related Policies to Improve Talent Mobility in the Greater Bay Area
  • Volume 24, Number 1
  • PRC & International Technical Column(s)
Description

One unique feature of the Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”) is that it consists of three different tax systems. The judicial difference in tax systems for individuals between the Mainland, Hong Kong, and Macao may have hindered the cross-border free flow of labour and services. Since the issuance of the Outline Development Plan for the GBA, relevant implementation policies have been gradually issued by the Mainland’s central, provincial, and municipal governments to facilitate integration in the GBA. This article 1) discusses the tax challenges faced by non-China-domiciled individuals (including Hong Kong, Macao, and Taiwan residents) who are frequent business travellers and who commute across the borders in the GBA and 2) highlights two aspects of the new tax policies introduced by the Mainland in 2019 and the first half year of 2020 that could benefit these individuals: i) the new counting method for determining the number of days that non-China-domiciled individuals reside in the Mainland that reduces the likelihood of them being treated as PRC residents and taxed on their worldwide income and ii) the new tax policies granting individual income tax rebates for qualified overseas talent working in the nine cities in the Pearl River Delta.

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Exploring Internal Enablers of Workforce Agility in Tax Consulting Services: Big-Four Practitioners’ Perspective
  • Volume 24, Number 1
  • PRC & International Technical Column(s)
Description

Tax consulting service have been changing rapidly due to advances in technology, digital technology, connectivity, analytics, and information technology. Tax services can be categorised as technologyintensive services provided to highly dynamic clients. To adapt in such a changing environment and to meet taxpayers’ (clients’) increased expectations, consulting firms need to provide high-quality deliverables with the help of a highly agile workforce. Many researchers have identified enablers of workforce agility in different segments, but none have looked into the tax consulting domain. This paper aims to explore the major internal enablers that contribute to workforce agility in tax consulting services. The study is
based on a self-administered questionnaire survey of 435 tax professionals presently employed by Big-Four subsidiaries in India. The SEM results indicate that all of the identified enablers significantly and positively contribute to workforce agility in tax units. Organisational learning turns out to be the most crucial variable contributing to an agile workforce. Data analytics and automation, workforce upskilling, and collaboration are also significantly associated with workforce agility and help to promote agility among tax professionals. The results suggest that workforce agility in tax consulting services requires an organisational learning culture that supports new tax data analytics infrastructure and tax automation initiatives, the development of upskilling programmes, and a collaborative workplace for idea sharing and socialised learning. All of these enablers support professionals to act in all decision-making situations to accomplish organisational goals faster.

Keywords: Workforce agility; Big Four; Tax Consulting; Tax

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BEPS 2.0: Reshaping the International Tax Landscape and What this Means for Businesses
  • Volume 24, Number 1
  • PRC & International Technical Column(s)
Description

Since the release of the Organisation for Economic Co-operation and Development’s (“OECD”) final report on Base Erosion and Profit Shifting (“BEPS”) Action 1: ‘Addressing the Tax Challenges of the Digital Economy’ in 2015, the OECD has released a number of documents on the digital economy which represent a significant shift away from traditional taxing principles to focusing on the allocation of taxing rights to jurisdictions where customers or users are located and expanding the nexus rules in the absence of a physical presence in a market. The OECD’s proposals, if implemented, will have a far-reaching impact on all multinational businesses, irrespective of their engagement with the digital economy, as the OECD seeks to implement such principles to the broader economy. This article focuses on Pillar 1 of the OECD’s work plan and the potential implications for multinationals of a move away from the established arm’s length principle.

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Capital Gains in Fiji: Legislative Framework and Key Issues
  • Volume 24, Number 1
  • Belt & Road Column(s)
Description

This article critically examines the provisions related to capital gains tax under Fiji’s 2015 Income Tax Act. As a part of this examination, the paper iIn this process, arguments are raised, concerning the inclusion and exclusion of certain capital assets in defining a capital asset and in the computation of capital gains tax. The article also raises certain contentions that reflect the loopholes in the legal framework of capital gains tax that can be exploited for tax avoidance. The study further conducts a comparative examination of the capital gains taxation prescribed under the 2011 Capital Gains Decree and the 2015 Income Tax Act. Judicial pronouncements are cited. The researchers conduct an empirical study that examines the number of cases filed in different adjudication forums in Fiji and compares the success and failure rate of the taxpayer and Fiji’s Revenue and Customs Service in these cases. In concluding remarks, the authors discovered that the Jurisprudence of Capital Gain Taxes in Fiji are at toddler stage and the judicial interventions is minimal.

Keywords: Capital Asset; Capital Gain; Exemptions; Intangible Assets; Tax Avoidance

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Letter to the Editors (July 2020)
  • Volume 24, Number 1
  • Letters to the Editors
Description
A Review of Recent Board of Review Cases
  • Volume 23, Number 2
  • HK Technical Column(s)
Description

This article will review the cases reported in the second and third supplements of Volume 33 of Board of Review Cases, which were published in April and July 2019, respectively. There are four profits tax cases, five salaries tax cases, one property tax case, one appeal out of time case, and one case on penalty and costs of a hearing. Regarding the four profits tax cases, two are on property disposal, one is on a source issue, and one looks at whether the lending of money constitutes business. The salaries tax cases cover the issues of deduction of professional subscription fees, deduction of home loan interest, source of employment, chargeability of termination payment, and finalization of tax liability.

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Taxation of Carried Interest – View from Hong Kong
  • Volume 23, Number 2
  • HK Technical Column(s)
Description

The tax treatment of carried interest (often referred to simply as “carry”) has been a contentious issue in Hong Kong for a number of years and one which has never been comprehensively addressed by the Inland Revenue Department (IRD). In this article, we examine the practices which have emerged in relation to the issue in Hong Kong, consider the extent to which those practices can be reconciled to the law, and explore ways in which the issue could be dealt with in order to better align with the law and provide an equitable outcome with high levels of certainty.

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“BEPS 2.0” and the Future of Intra-Group Financing in Hong Kong
  • Volume 23, Number 2
  • HK Technical Column(s)
Description

Under Hong Kong’s territorial tax system, only interest income that is derived from Hong Kong (or deemed as such) can generally be within the scope of Hong Kong Profits Tax. Hong Kong companies that lend overseas are in some cases not subject to Hong Kong Profits Tax on interest receipts. Under new proposals made by the Organisation for Economic Co-operation and Development (“OECD”), Hong Kong’s approach to taxing interest could come under increasing pressure. The denial of foreign interest deduction or the blocking of treaty access for interest withholding tax relief are among the potential implications of these new proposals. Multinational groups should be considering now what to do if such rules were to be enacted, including contingency plans looking at bringing such payments within the Hong Kong tax net and a consideration of the Hong Kong Corporate Treasury Centre (“CTC”) regime for qualifying entities. With indications that the Hong Kong Government is planning to enhance the CTC regime, if this is effectively handled, it could in fact create new opportunities to attract global investment through Hong Kong as a financing and treasury hub.

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A Critical Assessment of the Hong Kong Inland Revenue Department’s Revised Departmental Interpretation and Practice Note No. 28 on the Deductibility of Foreign Tax
  • Volume 23, Number 2
  • HK Technical Column(s)
Description

As a general rule, the well-informed Hong Kong tax practitioner tends to anticipate developments in Inland Revenue Department (IRD) departmental interpretation and practice notes (DIPNs) with a sense of dread and stoic resignation. In our well-worn cynicism, we assume there will be something wrong with the positions of laws pronounced on behalf of the Commissioner, ex cathedra; the question is only just how wrong the guidance will be and what sort of impact it will have on our clients. The August 2019 revision of DIPN No.28 on the deductibility of foreign taxes under section 16(1) of the Inland Revenue Ordinance (IRO), however, presented the long-suffering tax practitioner with a piece of technical analysis so patently wrong and illinformed that it can only, as I have written in the past in regard to the carry-forward of losses pursuant to an amalgamation, have been impelled by practical concerns, rather than technical purism. At least, one would very much hope that to be the case…

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