Hong Kong Tax Alert (Archive) - Ernst & Young - China

Hong Kong Tax Alert (Archive)

Tax Alert is produced as a client service by Ernst & Young. It is intended to serve as a guide only to alert readers to emerging issues and issues of topical interest. Readers should consult with their client service executives for advice concerning their specific circumstances.

2009

• Tax Alert - December 2009 (Issue No. 3) 
  December 22, 2009
  The decision of the Board of Review in case D61/08 has heightened taxpayers’ concerns with the Revenue’s strict interpretation of section 39E of the Inland Revenue Ordinance. Under this interpretation, the Revenue would deny tax depreciation allowances for plant and machinery (including moulds) used in the Mainland under import processing arrangements.
  
  Following the concerns raised, the Panel on Financial Affairs of the Legislative Council invited interested parties to make submissions and representations on the issue for its consideration in its special meeting held on 14 December 2009.  This Hong Kong Tax alert reports to you the views there expressed and the motion finally adopted at the end of the meeting.
  
• Tax Alert - December 2009 (Issue No. 2) on DIPN 21  
  December 10, 2009
  Earlier this month, the Inland Revenue Department issued the long-awaited practice note on the important issue of source of profits. This Hong Kong Tax alert summarizes the practice note which may have an impact on your business operation.
  
• Tax Alert - November 2009 
  November 30, 2009
  The recent decision of the Board of Review D61/08 endorses the Revenue’s strict interpretation of sections 16G and 39E of the Inland Revenue Ordinance, in its denial of tax relief to taxpayers  who provide plant and machinery to manufacturing entities in mainland China under import processing arrangements. This Hong Kong Tax alert discuss the issues involved.
  
• Tax Alert - October 2009 
  November 5, 2009
  In a recent Board of Review Decision D41/08, management fees of HK$128 million borne on behalf of other group companies were disallowed, despite the same were claimed to have been recouped in the taxpayer’s extra profits earned from the trading of goods with the companies concerned. This Hong Kong Tax alert analyses and discusses the implications of the case.
  
• Tax Alert - September 2009
  September 17, 2009
  In a recent Board of Review decision D17/08, a taxpayer was charged tax penalties of HK$53 million as a result of a failed tax avoidance arrangement. This Hong Kong Tax alert analyses and discusses the implications of the case.
  
• Tax Alert - August 2009, Issue No. 2 
  August 20, 2009
  The Court of Final Appeal decision in Ngai Lik Electronics Company Limited v CIR held that the non arm’s length terms for the supply of goods in the case fell foul of the general anti-avoidance provision contained in section 61A of the Inland Revenue Ordinance.  This Hong Kong Tax alert analyses and discusses the implications of the case.
  
• Tax Alert - August 2009 
  August 5, 2009
  In the much-awaited decision by the Court of Appeal (CA) in the case of CIR v Datatronic Limited, the CA held that a taxpayer who had an import processing arrangement with its subsidiary in the PRC was not a manufacturer but a trader.  As such, the manufacturing involvement of the taxpayer in the PRC subsidiary’s operations was ignored in considering the source of the trading profits.  The trading profits were held to be fully chargeable to tax in Hong Kong as the trading operations were carried out by the taxpayer in Hong Kong.  This alert analyses and discusses the issues involved.