CONFIDENTIAL
FM HONG KONG
TO PRIORITY FCO
TELNO 1716
OF 250849Z JUNE 92
CONFIDENTIAL
HKA 233/1
-JUN 992
INFO ROUTINE PEKING, UKREP JLG HONG KONG
TOP COPY Q DIST ??
146744 MDLIAN 5035
Pa
1428
OUR TELNO 723: HMOCS: TAX
·
1 WE HAVE NOW RECEIVED SPECIFIC ADVICE FROM THE INLAND REVENUE, CONFIRMED BY FINANCE BRANCH, THAT PHASED LUMP SUM COMPENSATION/INCENTIVE PAYMENTS BY HMG UNDER THE INITIAL DRAFT HMOCS COMPENSATION SCHEME WOULD BE LIABLE TO HONG KONG SALARIES TAX. ONLY LUMP SUM COMMUTED PENSION GRATUITIES AND LUMP SUM COMPENSATION FOR LOSS OF OFFICE OR EMPLOYMENT WOULD BE EXEMPT FROM TAX. A COPY OF THIS ADVICE IS BEING FAXED TO COX (HKD)
SEPARATELY.
2. AN AMENDMENT TO THE INLAND REVENUE ORDINANCE WOULD BE NECESSARY TO MAKE HMOCS COMPENSATION PAYMENTS TAX EXEMPT. OUR ASSESSMENT IS THAT IN THE PRESENT POLITICAL CLIMATE SUCH AN AMENDMENT WOULD BE DIFFICULT TO JUSTIFY, WOULD BE CONTROVERSIAL AND IS UNLIKELY TO FLY WITH LEGCO. A LOGICAL ALTERNATIVE WOULD BE TO ENHANCE THE COMPENSATION FACTORS TO TAKE 15 PERCENT TAX LIABILITY INTO ACCOUNT.
WILSON
YYYY
ΜΑΙΝ
40
DISTRIBUTION
40
.HER MAJESTY'S OVERSEAS
.CIVIL SERVICE RESTRICTED
HKD
LEGAL ADVISERS//MISS BROOKS
FED
NEWS D
RAD//MR WYE
PS
PS/MR GOODLAD
PS/MR PATTEN
PS/PUS
SIR J COLES
MR HUM
MR KERBY
RMD
OVERSEA PENSIONS/ODA//MR FISH,