Sir,
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DRAFT SPEECH BY HON PETER POON, MBE, JP
LEGISLATIVE COUNCIL
6.2.85
Inland Revenue (Amendment) (No. 2) Bill 1984
From the large amount of tax held over in respect of cases under objection and the results of the decisions, it is evident that there have been many cases of abuse of the holdover practice under Section 71(2) of the Inland Revenue
Ordinance. The introduction of the Inland Revenue
(Amendment) (No. 2) Bill 1984 with the proposed amendments is therefore both necessary and timely. Under the new Bill, the
Commissioner, in objection cases, has the discretion of
requiring the taxpayer to purchase Tax Reserve Certificates or
to provide an acceptable bank guarantee. If the taxpayer buys
the Tax Reserve Certificates and wins the objection, he will
get his money back together with the interest on the Tax
Reserve Certificates, presently at 5.52%. On the other hand,
if he loses, the Tax Reserve Certificates he bought will be
used to pay for his tax liability and no interest will be paid to him. However, if he is required to lodge an appropriate bank guarantee and is unsuccessful in his objection, he will
have to pay his tax plus interest under Section 50 of the District Court Ordinance, i.e. at the rate applicable to
judgement debt, presently at 13%. In the event that the
Commissioner grants an unconditional holdover, interest at the
same rate shall be required to be paid together with the tax
due by a taxpayer whose objection is unsuccessful.
*
The provisions just mentioned will greatly strengthen the collection of tax by the Commissioner in practice, though in law he already has absolute discretion not to grant any hold
over. At present, if there is a holdover, no interest is
charged even if the taxpayer is finally unsuccessful in his objection. On the other hand, where the commissioner requires the tax to be paid despite the lodging of an objection, no
provision is made for interest on tax paid on account by the
taxpayer should he succeed in his objection.
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