Category: APJT Archive

With the deepening of globalisation, the OECD has called for the strengthening of multilateral cooperation and the adoption of harmonised measures to suppress double non-taxation and transfer pricing has become one of the core international taxation and anti-avoidance subjects. In this context, Chinese companies will inevitably encounter transfer pricing issues when investing overseas. This article discusses potential transfer pricing issues and the coping measures for Chinese companies from a “going-out” perspective....

Under section 70A of the Inland Revenue Ordinance (“IRO”), a taxpayer can apply to correct an assessment within 6 years after the end of the year of assessment concerned or 6 months after a relative notice of assessment is served, whichever is the later, if they can prove that the tax charged for that year of assessment is excessive by reason of an error or omission. A recent judicial review case handed down by the Court of First Instance in Good Mark Industrial Limited v. Commissioner of Inland Revenue [HCAL 88/2012] concerns how the time limit for a section 70A application should be interpreted. The issue involved a protective assessment served close to the expiration of the normal six-year time limit for raising an additional assessment for a year and whether the serving of the same enabled the time limit for a section 70A application to correct an earlier assessment for the same year to be extended by up to...

There are 19 cases reported in the First and Second Supplements to Volume 28 of the Board of Review (BOR) cases: seven profits tax cases, seven salaries tax cases, and five tax administration cases. Of the profits tax cases, five relate to property transactions and whether these transactions were of a trading nature and two concern deduction of expenses. The seven salaries tax cases include two cases on chargeability to salaries tax and the taxability of payment, three cases on deduction of expenses, and two cases on dependent parent allowance....

“Equity is A Roguish thing, for Law wee have a measure know what to trust too. Equity is according to ye conscience of him yt is Chancellor, and as yt is larger or narrower soe is equity. Tis all one as if they should make ye Standard for ye measure wee call A foot, to be ye Chancellors foot; what an uncertain measure would this be; One Chancellor ha’s a long foot another A short foot a third an indifferent foot; tis ye same thing in ye Chancellors Conscience.” “Nothing would inflict upon me greater pain, in quitting this place, than the recollection that I had done any thing to justify the reproach that the equity of this Court varies like the Chancellor’s foot.”...

The new Canada/Hong Kong Double Tax Agreement (the “Agreement”) came into force on 1 January 2014. The implications for both Canadian and Hong Kong persons are significant, as this article will show. The Agreement follows the standard OECD international tax treaty model in most respects, which is perhaps surprising because the tax systems of the Parties are so different. Hong Kong has a territorial tax system, while Canada levies tax on world income....

VAT reform in China has dominated the domestic tax landscape for the past two years. This reform—a key component of the country’s 12th Five-Year Plan (the blueprint for China’s economic development until 2015)—is seen as one way of assisting China to successfully shift its focus away from a manufacturing model and towards the development of its services sector. It was therefore no surprise when VAT reform was announced at the end of 2011, ending years of speculation....

On 19 July 2013, at the request of the G20 finance ministers, the Organisation for Economic Cooperation and Development (OECD) publicly released its “Action Plan” for multilateral cooperation to address tax base erosion and profit shifting (BEPS). The BEPS Action Plan describes 15 proposed actions, outlined herein, intended to provide concrete solutions to address the tax avoidance issues identified in the report “Addressing Base Erosion and Profit Shifting (BEPS Report)” prepared by the OECD and released on 12 February 2013....

In the recent case of Nice Cheer Investment Limited (NCIL) v. Commissioner of Inland Revenue (CIR) FACV 23/2012 (Nice Cheer), the Court of Final Appeal (CFA) ruled that the increase in the value (i.e. revaluation gain) of trading stocks at the balance sheet date which was recorded as unrealised profits in the income statement should not be assessable to tax in Hong Kong. This upheld the judgments of the Court of First Instance (CFI) and Court of Appeal (CA) in favour of NCIL. This case was heard by the CFA on 16-17 October 2013, and the written judgment was delivered by the CFA on 12 November 2013. The CFA reaffirmed that profits are not taxable until they are realised and profits must not be anticipated. The CFA also concluded that accounts drawn up in accordance with the ordinary principles of commercial accounting must nevertheless be adjusted for tax purposes if they do not conform to the underlying principles of taxation....

Volume 28 of the Board of Review Decisions has recently been published, with 10 cases being reported: five salaries tax cases, two profits tax cases, two property tax cases, and one case concerning a request for the Board to state a case. This review includes cases concerning the assessment of an education subsidy, a claim for a rental payment deduction, the assessment of rent paid in advance, the disallowance of depreciation allowance, and the effect of the 20 per cent statutory deduction in a property tax assessment....

The Hong Kong Special Administrative Region (HKSAR) is facing unprecedented pressure from the Organisation for Economic Cooperation and Development (OECD) and the United States (US) with respect to information exchange. The enactment of the Inland Revenue (Amendment) (No 2) Ordinance 2013 on 10 July 2013 enables the HKSAR to utilise enhanced information exchange under comprehensive double tax agreements (DTAs) and to enter into tax information exchange agreements (TIEAs). The HKSAR is also facing pressure following the enactment of the US’s Foreign Account Tax Compliance Act (FATCA) in 2010. This paper briefly outlines the implications of these international developments and examines the HKSAR’s responses to date....