Category: APJT Archive

Since enacting a law in January 2010 to enable it to adopt a wider exchange of information article in its comprehensive double taxation agreements (“DTAs”), Hong Kong has achieved a significant expansion of its DTA network. Since making the relevant legislative amendments, Hong Kong has concluded 17 DTAs, bringing the total number of DTAs concluded with other jurisdictions to 22 as at 14 December 2011. In addition, Hong Kong is currently conducting DTA negotiations with at least a further 14 jurisdictions. Given this momentum, Hong Kong’s DTA network looks set to further expand at a rapid pace....

The third supplements of Volume 25 and Volume 26 of the Board of Review Decisions have recently been published, with 26 cases being reported: 16 salaries tax cases, 8 profits tax cases, and 2 property tax cases. Among the cases included in this commentary are cases dealing with the assessment of share option benefits, a rental refund arrangement, property-dealing profits, a tax avoidance scheme, and the meaning of (a) “residence” for the purpose of home loan interest deduction and (b) “permanent resident” for the purpose of personal assessment election....

As more countries adopt transfer pricing rules and as others continue to enforce them with increasing vigour, the need for international convergence on key matters of transfer pricing is becoming critical. The Organisation for Economic Co-operation and Development (OECD) plays a pivotal role in this respect. The OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (OECD Guidelines) were first published in 1979 and subsequently revised in 1995.2 The Guidelines represent the OECD interpretation of Article 9 of the OECD Model Tax Convention. Article 9 is adopted in most double tax agreements made between countries, and not only OECD member countries; the Guidelines are therefore the de facto rules for interpreting double tax treaties. The United Nations model treaty closely adopts the OECD Guidelines in most respects. The Guidelines have also been the de facto regulation of choice for many countries that lack formal guidelines of their own. In these (and many other) instances, transfer pricing approaches and principles...

This article focuses on reform issues currently under consideration by tax and regulatory authorities to facilitate Islamic finance in Australia. A comprehensive approach is critical if the Government’s desire to promote Australia as a financial services hub is to be realised. But in pursuit of this goal, one identified delimiter in attracting Islamic finance remains the current lack of tax parity treatment. We argue that if such tax reforms are to be implemented, an overarching approach should be taken to guide reforms, particularly to ensure there are no adverse consequences, such as increased complexity and potential for tax avoidance. In addressing these shortcomings and potential barriers, this article proposes tax reform models aimed at providing guidance in designing appropriate tax measures for consideration by the regulatory authorities. Drawing on approaches taken in foreign jurisdictions, we argue in favour of an “integrative” approach that incorporates an exception method....

The Chinese Government has set the structural transformation of the Chinese economy as one of its national priorities.2 As part of that endeavour, China wants to move away from being a manufacturing hub to one that occupies multiple and more value-added functions in the global supply chain. To that end, it is focusing on research and development (R&D), high-end manufacturing, and service sector development. This direction presents a unique opportunity to companies in the high-tech industry. Since 2008, most tax incentives have been directed at companies with advanced technology. On the other hand, this has also made these companies more visible to the Chinese authorities, including the transfer pricing authorities....

In recent years, business restructuring has become a hot topic for multinational corporations (MNCs) and tax administrators around the globe. To MNCs, globalisation means establishing their footprint in different parts of the world, but this is just the beginning of the process. The competitive environment MNCs face may require them to improve cost efficiency, enter new markets or exit from existing ones, or better develop, protect, and manage their intellectual property in order to maintain their ability to perform successfully on a global basis. It is this setting that forces businesses onto the path of restructuring, whether along commercial, operational, and/or legal lines....

Chinese outbound investments have grown rapidly over the past few years. While most recent outbound transactions have been made by state-owned enterprises, there is also growing participation by privately owned Chinese enterprises seeking overseas acquisitions to expand their global market share or to diversify their supply chain, amongst other objectives. From a tax-efficiency perspective, it is important for Chinese acquiring enterprises to carefully evaluate, examine, and design appropriate acquisition and holding structures, financing arrangements, and operating models with a view to minimising overseas and homeland tax leakages. In view of recent Chinese tax law developments, this article focuses on the major tax issues requiring the investor’s consideration in effecting the acquisition and holding structures of a Chinese outbound investment....

On 20 November 2010, the Government of the Hong Kong Special Administrative Region introduced a Special Stamp Duty (SSD) on residential property acquired and resold within 24 months. In June 2011, the Legislative Council passed the relevant amendment to the Stamp Duty Ordinance. This article first examines the reasons for and the mechanism of the SSD. It then looks at a number of issues, namely constitutional challenges, determination of holding periods, certainty and proportionality, use of shell companies, and transfers of payment arising from introduction of the SSD. Finally, it proposes that in addition to the SSD, the Government could make use of existing antiavoidance measures to combat ever-rising property prices....

The First and Second Supplements of Volume 25 of the Inland Revenue Board of Review Decisions (IRBRD) have recently been published with 21 cases reported: one penalty tax case, one personal assessment, one property tax case, seven profits tax cases, and 11 salaries tax cases. This commentary includes cases on penalty tax, the meaning of “ordinarily resident” for the purpose of granting dependent parent allowance, the trading in landed properties, avoidance of profits tax, interest deduction on personal assessments, and more....

Recently Singapore ratified its avoidance of double taxation agreement (DTA) with Libya, bringing the total number of comprehensive DTAs that Singapore has in force to 64 (with another five treaties pending ratification). This achievement is impressive, considering that the other “Asian tigers” of Hong Kong, Taiwan, and South Korea have 8, 20, and 77 DTAs, respectively, at the time of writing. Singapore considers its tax-treaty network integral to maintaining a competitive tax regime. Other countries or regions such as Hong Kong also share this view. Mr Frederick Ma, a former Hong Kong Secretary for Financial Services and the Treasury, previously said: “Many places in the region have already established a network of [comprehensive DTAs]. Having such a network in place for Hong Kong will put us on a par with other places in the region that already have one, thereby further enhancing our competitiveness. Since Singapore’s international tax policies are closely tied to its economic goals, here we examine how...