36
respect of it himself" (Pennington's Company Law 4th Edition at 517).
It is apparent that the words "as a gross sum subject to tax" in section 157G(2) are in practice either ignored or construed to mean
"as a grossed up sum subject to tax"
I have never seen a case argued for the need for the section
In truth or seen any statement of the "mischief" it seeks to prevent.
it is a misconceived provision, largely ignored in practice, avoided by
the well advised, a confusing trap for the unsophisticated and of no
interest to the Commission of Inland Revenue. I suggest it should be
reconsidered and either amended to accord with the practice under the
Inland Revenue Ordinance or repealed.
It may be added that section 157G only applies to directors
and does not affect other employees whose Salaries Tax may be paid
by the company and deducted for Profits Tax purposes as part of the total remuneration package (see IRO section 17(1)(g)). What is so
special about directors in this regard?"
7.3
We ourselves can not see any basic flaw in Professor Willoughby's
arguments and we therefore recommend that Section 157G be repealed.
8.
Section 228A of the Companies Ordinance (Special procedure
for voluntary winding up in case of inability to continue
its business)
8.1
The Standing Committee's Report for 1985 mentioned briefly,
in paragraph 10.1, that consideration was being given to amendments
in respect of inter alia, the above section.
137