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Ord. No. 7/86
(Cap. 335.)
INLAND REVENUE (AMENDMENT)
(ii) by deleting the full stop at the end of paragraph (e) and substituting a semicolon;
(iii) by inserting after paragraph (e) the following-
"(f) the person chargeable to tax is a corporation and the deduction is
in respect of interest payable by that corporation-----
(i) on debentures;
(ii) to the holder of any instrument issued-
(A) bona fide and in the course of carrying on business and which is marketable in Hong Kong or in a major financial centre outside Hong Kong approved by the Commissioner for the purposes of this sub-paragraph; or (B) in pursuance of any agreement or arrangements, where the issue of an advertisement or invitation to the public in respect of such agreement or arrangements, or any document which contains such an advertisement or invitation, has been authorized by the Securities Commission under section 4(2)(g) of the Protection of Investors Ordinance; or
(iii) on moneys borrowed from an associated corporation, where the moneys borrowed in the hands of the associated corporation arise entirely from the proceeds of an issue by the associated corporation of debentures or of any such instrument as is described in sub-paragraph (ii), in an amount not exceeding the interest payable by the associated corporation to the holders of its debentures or of such instruments.";
(b) in subsection (3) by inserting after paragraph (b) the following-
"(ba) "debentures" means debentures listed on a stock exchange in Hong Kong or any other stock exchange recognized for the purposes of this paragraph by the Commissioner;";
(c) in subsection (5) by deleting everything following "that Ordinance" and
substituting the following--
Amendment of section 17.
5.
Amendment of section 39D.
Addition of new section 39E.
"where the deduction is in respect of sums payable prior to 1 April 1984.".
Section 17(1) of the principal Ordinance is amended-
(a) by deleting the full stop at the end of paragraph (h) and substituting a
semicolon;
(b) by inserting after paragraph (h) the following-
6.
"(i) any provision made for the payment in respect of an employee of any sum referred to in paragraph (h), to the extent that the aggregate of such provision and any such payment as is referred to in that paragraph exceeds 15 per cent of the total emoluments of that employee for the period in respect of which the provision is made; or
(j) any provision made in respect of a retirement scheme other than
for the payment of any sum referred to in paragraph (h).".
Section 39D(7) of the principal Ordinance is amended by inserting after "capital expenditure" where it first appears the following-
"incurred on the provision".
7. The principal Ordinance is amended by adding after section 39D the following-
}
"Allowances under this Part in respect of capital expenditure on leased machinery and plant.
(7 of 1986.)
INLAND REVENUE (AMENDMENT)
Ord. No. 7/86
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39E. (1) Notwithstanding anything to the contrary in this Part, a person (in this section referred to as "the taxpayer") who incurs capital expenditure on the provision of machinery or plant, being machinery or plant acquired by the taxpayer under a contract entered into after the commencement of the Inland Revenue (Amend- ment) Ordinance 1986, for the purpose of producing profits charge- able to tax under Part IV shall not have made to him the initial or annual allowances prescribed in section 37, 37A or 39B if, at a time when the machinery or plant is owned by the taxpayer, a person holds rights as lessee under a lease of the machinery or plant, and--
(a) the machinery or plant was, prior to its acquisition by the taxpayer, owned and used by that person (whether alone or with others), or any associate of that person (which person or any such associate hereinafter referred to as "the end-user"); or
(b) the machinery or plant, not being a ship or aircraft or any
part thereof, is while the lease is in force-
(i) used wholly or principally outside Hong Kong by a person other than the taxpayer; and
(ii) the whole or a predominant part of the cost of the acquisition or construction of the machinery or plant was financed directly or indirectly by a non-recourse debt; or (c) the machinery or plant is a ship or aircraft or any part
thereof and-
(i) the person holding rights as lessee is not a person who is deemed by section 23B to be carrying on a business as the owner of ships in Hong Kong; and
(ii) the whole or a predominant part of the cost of the acquisition or construction of the ship or aircraft or the part thereof was financed directly or indirectly by a non-recourse debt.
(2) Subsection (1)(a) shall not apply where—
(a) the machinery or plant was acquired by the taxpayer on payment from the end-user at not more than the price which the end-user paid to the supplier (not being a supplier who is himself an end-user); and
(b) no initial or annual allowances have at any time prior to the acquisition of the machinery or plant by the taxpayer been made under section 37, 37A or 39B to the end-user in respect of such machinery or plant.
(3) For the purposes of subsection (2) an allowance shall be deemed not to have been made if the end-user, by notice in writing to the Commissioner within 3 months of the date on which the capital expenditure on the provision of machinery or plant giving rise to the allowance is incurred, or within such further time as the Commis- sioner may, in any particular case, permit, disclaims such allowance.
(4) For the purposes of this section machinery or plant owned or leased by a trustee shall be deemed to be owned or leased both by the trustee and the beneficiary under the trust or, in the case of a discretionary trust, both by the trustee and by such beneficiary as the Commissioner may, in his discretion, determine to be the beneficiary during the relevant basis period.
(5) In this section-
"acquisition" means acquisition by a person as owner and includes holding or hiring under a hire-purchase agreement or, if the hire-purchase agreement is a conditional sale agreement, holding as purchaser;