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CONFIDENTIAL Indassified
GOVERNOR ▪S TAX POSITION
SUGGESTED LINE TO TAKE FOR FCO
IN ANSWER TO QUESTIONE
Governor's salary and tax position matter for Hong Kong Government.
[If Pressed]
The Hong Kong Administration (Chief Secretary] appointed a Panel of three independent experts in May to review the Governor's exemption from salaries tax.
This followed the parallel in the case of The Queen, where three Royal Trustees were asked to advise on The Queen's tax position.
The Panel has recommended that there be no change in the Governor's tax position, on three grounds:
(i) Hong Kong law exempts him from salaries tax;
(ii)
He has a binding contract which specifies that he should not be liable to salaries tax;
(iii) There is no meaningful comparison with the
position of HM The Queen who (unlike the Governor) was previously not liable to pay tax on any income and of course has no contract.
The Executive Council (sitting without the Governor present) has agreed with the Administration's advice to accept the Panel's recommendations.
CONFIDENTIAL Unclassified