Category: APJT Archive

This article provides background on the Guangdong-Hong Kong-Macau Bay Area (“the GBA”) initiative, summarises its current implementation status, and discusses a list of recommended tax and business measures for Hong Kong and the mainland that could support Hong Kong’s ability to address the challenges faced in fully capitalising on the opportunities arising from the GBA initiative. Taking into consideration the current tax legislation in Hong Kong and the existing tax and business regulations in the mainland, our recommended tax and business measures are: 1) refining the intellectual property (“IP”) taxation regime in Hong Kong; 2) enhancing research and development tax deduction in Hong Kong; 3) granting Hong Kong tax relief for plants and machinery and IP used in the GBA to produce Hong Kong chargeable profits; 4) reducing the individual tax and other costs in the mainland for Hong Kong residents working in the GBA; 5) allowing Hong Kong companies to set up branches in the GBA, and 6) reducing...

This article summarises 12 cases reported in Volume 32 Second and Third Supplements of the Inland Revenue Board of Review Decisions. These include five cases on salaries tax and four cases on profits tax. There are also two penalty tax cases, one of which also considers the issue of eligibility for personal assessment, and one case-stated case....

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Indonesia continues to be the largest economy in the Southeast Asia region. Indonesia has a well-balanced economy and steady GDP growth in which all major sectors play an important role. Historically, agriculture and energy have been the dominant sectors in terms of both employment and output. Indonesia also produces of a broad range of commodities, as well as consumer and industrial products. Palm oil has been the country’s largest export in recent years, followed by oil and gas, mining products, chemicals, mineral fuels, textiles, electrical equipment, agricultural products, and machinery. The current administration’s focus on infrastructure has attracted more foreign investment, particularly from China. In the past few years, foreign direct investment from China has increased rapidly, and as a source of investment in Indonesia, China is now in the top three countries, behind Singapore and Japan. Under China’s Belt and Road initiatives, Indonesia is benefitting in terms of gaining infrastructure-related engineering and technology expertise and long-term capital project financing...

Israel has been celebrated as an economic miracle riding on its brand of being a “start-up nation”. Geographically located in the Middle East to the eastern end of the Mediterranean Sea, Israel has had limited natural resources and has struggled with wars and political instabilities since it declared independence 70 years ago in 1948. Yet, Israel’s tremendous economic growth, particularly in high-tech industries, in the past decades has earned Israel its membership of the Organisation for Economic Co-operation and Development (“OECD”) in 2010, placing it amongst the other 34 most developed economies in the world....

In this article, the author introduces the recent Common Reporting Standard legislation and gives an overview of the development of exchange of information between Taiwan and mainland China, Hong Kong, Macao, and other countries. It also compares the regulations of the Common Reporting Standard with the rules for taxing the incomes of individual controlled foreign companies and for country-by-country reporting to analyse the applications on anti-tax avoidance and double-taxation issues. In the conclusion, the author emphasises that accounting and tax professionals should catch up with the fast change of international laws and provide valuable services to clients through more cross-border collaboration....

On 29 December 2017, the Hong Kong SAR Government (“the Government”) introduced draft legislation, the Inland Revenue (Amendment) (No. 6) Bill 2017 (“the Bill”), to implement key actions arising from the base erosion and profit shifting (“BEPS”) agenda of the Organisation for Economic Co-operation and Development (“OECD”). When enacted, the Bill will codify transfer pricing rules into Hong Kong’s domestic tax law, introduce mandatory transfer pricing documentation requirements, formalise the advance pricing arrangement (“APA”) regime, and impose a penalty regime with civil and criminal sanctions....

In line with the Hong Kong Government’s recent efforts to use tax policy as a tool to drive economic development, Chief Executive Carrie Lam announced in her Policy Address on 11 October 2017 that the Government would introduce enhanced tax deduction for R&D expenditure in 2018 to boost the development of innovation and technology in Hong Kong. Hong Kong remains one of the most successful economies in the world. However, its efforts to encourage innovation and technology through R&D tax incentives lack the variety and sophistication of some other major economies. This article explores the issues that may need to be examined when formulating R&D tax incentive policy in Hong Kong in order for the policy to achieve its intended goals effectively....