Annex B
be
chargeable to Hong Kong
salaries
tax.
However,
compensation for
officers superseded for promotion and who
remain in the service is prima facie chargeable to salaries
tax as it cannot be regarded as compensation for loss of
principle also applies to
office or
employment.
to
This
officers who are superseded for promotion and who make
application
retire under the scheme as the compensation
could still not be regarded as compensation for loss of
office or employment.
7.
all
In order to achieve the original intention that
compensation paid to officers under the LCS should be
tax free, there is a need to gross up the compensation for
officers who are superseded for promotion to facilitate
localisation to cover their tax liability. It is proposed
factors at Tables IA and IB of the
that the
Appendix
compensation
to Annex A be grossed up by the standard tax rate
of 15%. Revised tables are at Annex B.
FINANCIAL IMPLICATIONS
8.
promotion
Το date, there have been no supersessions for
under the LCS. It is estimated about 30 staff
may have to be compensated on supersession for promotion
between now and June 1997. The additional expenditure on
compensation for
revenue.
supersession
would be recovered as tax
CONFIDENTIAL