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THE ECONOMY
and maintenance. A system of provisional payment of tax similar to that under the profits tax and salaries tax applies. Property owned by a corporation carrying on a business in Hong Kong is exempt from property tax but the profits derived from the property ownership are chargeable to profits tax.
Interest tax is charged on interest arising in or derived from Hong Kong. This is basically a withholding tax deducted at source unless the interest forms part of the profits of a corporation carrying on a trade or business in Hong Kong, in which case it is subject to profits tax. The rate of interest tax on chargeable interest is 17 per cent. Interest payable on foreign and Hong Kong currency deposits placed with financial institutions carrying on business in Hong Kong is exempt from tax. Interest paid or payable by the government and public utilities is also exempt from tax, provided it does not exceed a specified rate, which varies according to the prevailing level of interest rates.
Business registration fees, which form part of the revenue from fees and charges, are also collected by the Inland Revenue Department. Business registration is compulsory for companies incorporated in Hong Kong, overseas companies with a place of business in Hong Kong and businesses operating in Hong Kong, except those run by charitable institutions and licensed hawkers. The annual registration fee is $500, but exemption from payment is granted where the business is small. Every branch of a business is required to obtain a branch registration certificate and pay an annual registration fee of $15. In addition, a levy of $100, payable to the Protection of Wages on Insolvency Fund, is imposed on each business registration certificate issued to a business or its branch.
Other revenue arises from taxes on the registration of motor vehicles, fines, forfeitures and penalties, royalties and concessions, yields from properties, investments and land transactions, reimbursements and contributions, government utilities, and from fees and charges for the provision of a wide range of goods and services.
Audit of Public Accounts
The audit of all of the government's accounts is carried out by the Director of Audit. He also audits the accounts of the Urban Council, the Regional Council and the Housing Authority, and of more than 50 statutory and non-statutory funds and other public bodies, as well as reviews the financial aspect of the operations of the multifarious government- subvented organisations working in Hong Kong. The director's appointment, tenure of office, duties and powers are set out in the Audit Ordinance, which also provides that he shall not be subject to the direction or control of any other person or authority.
The Director of Audit's report on the annual accounts of the government is submitted to the Governor as President of the Legislative Council for tabling. It is then referred to the Public Accounts Committee, comprising a chairman and six members, all of whom are members of the Legislative Council. In the exercise of its authority, the committee may call any public officer or other person concerned to give information and explanations and to produce any documents and records which it may require. The committee holds its meetings in public except where the committee is of the opinion that the public interest requires confidentiality. The report by the Public Accounts Committee on the Director of Audit's report relating to the accounts of the government is also tabled in the Legislative Council. Both are copied to the Secretary of State.