CONFIDENTIAL
35
21 January 1993
BY FAX
Martin Dinham
Government House HONG KONG
Dear Martia
GOVERNOR'S SALARY AND TAX
2
Thank you for your letter of 16 January, and also for your fax of today's date.
1.
2.
I understand from the Inland Revenue that the present plan, which has not yet been given final approval by Ministers, is that a general description of The Queen's tax position should be included in the next report by the Royal Trustees, with a Memorandum of Understanding attached to the report setting out the position in detail (it will run to some 40 paragraphs). The date of publication has not yet been set, but is likely to be in mid-February. The Inland Revenue have asked that this information be kept strictly confidential.
3.
Further research on the position of other Governors confirms our earlier advice that there is no general FCO policy on taxation of Governors and that factors vary in each case. If a direct question is asked about whether The Queen's decision has any implications for Governors we suggest the reply might be as follows:
"The two cases are different.
We understand that The Queen
has agreed to pay tax on some part of Her assets: Her private investment income. The Governor is exempt from tax on his salary and related allowances. The terms and conditions of service of Governors are regulated by their local legislatures, unless their salaries are paid in full or in part by HMG, in which case they are subject to UK Income Tax".
4. I have shown the draft reply to the LegCo question and the supplementaries to our Personnel Services Department. They have confirmed that any information relating to HMG is accurate. I think the reply and supplementaries cover the ground well, although you might cosider substituting the line in para 3 above in place of the reply to Q7.
Ye ever,
PF Ricketts
Hong Kong Department
HKB Gol
Ves
RF!
16
**1993
mar.gov.ADM
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