1986 Ed.]
Inland Revenue Rules
[CAP. 112
case, the estimation of such due proportion of the management, clerical and general expenses shall be made on the basis of such percentage of the total cost of the investments and securities which comprise the investment portfolio as is most reasonable and appropriate in the circumstances of the case, not exceeding-
(a) one-eighth per cent in any case where the investments are held not for the purpose of, or not solely for the purpose of, producing profits by way of dividends, but for, or also for, the purpose of producing profits, by resale or share dealing;
(b) one-half per cent, in any other case.
(2) Where the investment portfolio of any person who is chargeable to tax under Part IV of the Ordinance is not, in the opinion of the assessor, sufficiently substantial to warrant making an adjustment in respect of the supervision and management of the portfolio, no disallowance or apportionment shall be made under paragraph (1).
2D. Any decision under rule 2A, 2B or 2C shall be subject to the same rights of objection and appeal as are conferred by Part XI of the Ordinance.
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[Subsidiary]
Rights of objection and appeal. L.N. 129/65.
Method of ascertainment and determination of the profits of the Hong Kong branch of a bank whose head office is elsewhere than in Hong Kong
3. (1) In this rule-
"bank" means any bank whose head office is elsewhere than in Hong Kong;
"Hong Kong branch" means the business carried on in Hong Kong by any such bank.
(2) Where any accounts prepared by a bank for its own purposes disclose, in the opinion of the Assessor, the true profits of the Hong Kong branch, the assessable profits shall be computed on the basis of such accounts.
(3) Where no accounts are prepared which in the opinion of the Assessor disclose the true profits of the Hong Kong branch, the following provisions shall apply in the determination of such profits--
(a) the same proportion of the total profits of the bank as the assets of the Hong Kong branch bear to the total assets of the bank shall be treated as profits made from transactions in Hong Kong and shall be assessed accordingly;
(b) for the purposes of determining the total profits of the bank, similar adjustments for tax purposes will be made in
Banks; Hong Kong branch offices.
7 of 1986, s. 12.
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