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HONG KONG ANNUAL REPORT
The basis of rateable value is the annual letting value of a tenement, by which is meant any land or any building or part thereof held or occupied as a distinct or separate tenancy or under licence from the Crown.
Rates are levied in Hong Kong Island, Kowloon, New Kowloon and also in that part of the New Territories adjacent to the main road from Lai Chi Kok to Castle Peak.
In Hong Kong Island, Kowloon and New Kowloon rates are, with a few exceptions, charged at 17% per annum of rateable value, and are payable quarterly in advance: in respect of the New Territories the corresponding charge is 11%. The valuations are prepared by the Commissioner of Rating and Valuation, and demand notes are issued by the Accountant General for payment at the Treasury. There is provision for a surcharge on any rates in arrears, but the yield from this has been comparatively small.
INTERNAL REVENUE
Tax on Earnings and Profits: Direct taxation on incomes was first introduced in Hong Kong in 1940 when the War Revenue Ordinance (1940) was enacted for the purpose of raising funds by way of a tax on incomes to assist His Majesty's Government in the prosecution of the War. The object of the wartime legislation had been removed by August 1945 when the Colony was liberated and no attempt was made to re-establish the administration of that temporary measure.
Post-war rehabilitation imposed a heavy drain on the Colony's resources and in 1947, in view of the urgent need of revenue, it was decided to introduce some measure of taxation on incomes in a more permanent form. The Inland Revenue Ordinance was enacted with the object of raising revenue through legislation which would be simple in operation; the principle of taxation at source being adopted in preference to that of obligatory individual
assessment.
The scope of charge under the Inland Revenue Ordinance is limited to incomes and profits arising in or derived from the Colony. Overseas income of a Hong Kong resident does not attract tax whether remitted to the Colony or not. The Ordinance imposes four separate taxes which cover the various types of income or