5 -
WEDNESDAY, AUGUST 16, 1978
MR. HADDON-CAVE EMPHASISED THAT THE TAX IS MERELY AN EXTENSION OF THE EXISTING AMBIT OF THE PROFITS TAX CHARGE. + IT IS NOT AN ENTIRELY NEW TAX- AND, AS SUCH, IT DOES NOT IMPLY ANY CHANGE IN THE GOVERNMENT'S ATTITUDE TOWARDS THOSE DOING BUSINESS HERE, OR WISHING TO SET UP IN BUSINESS HERE.+
+PROVIDED WE RELENTLESSLY PURSUE BUDGETARY AND FISCAL AND ECONOMIC AND MONETARY POLICIES WHICH ARE APPROPRIATE TO OUR CIRCUMSTANCES, THE ADVANTAGES OF CONDUCTING BUSINESS IN HONG KONG, IN ALL SECTORS OF OUR ECONOMY, WILL REMAIN SELF-EVIDENT TO THOSE CONCERNED AND IN PARTICULAR I WOULD STRESS THAT IT IS NOT OUR INTENTION TO MODIFY OUR GENERAL NON-DISCRIMINATORY APPROACH IN RESPONSE TO SPECIAL PLEADING FROM ANY QUARTER, HE SAID.
(6)
IMPLEMENTATION DATE
ON THE ARGUMENT THAT THE IMPLEMENTATION DATE OF APRIL 1, 1978 IS RETROACTIVE BECAUSE THOSE FINANCIAL INSTITUTIONS WHICH HAVE ACCOUNTING PERIODS ENDING OTHER THAN AT MARCH 31 WILL BE LIABLE TO TAX ON PROFITS OF PERIODS ENDING PRIOR TO APRIL 1, 1978, THE FINANCIAL SECREATRY SAID: +THOSE AFFECTED BY THE BILL ARE IN NO WORSE POSITION THAN THE GENERALITY OF TAXPAYERS IN THAT THE LEVEL OR THE INCIDENCE OF ANY TAX MAY BE CHANGED AT RELATIVELY SHORT NOTICE.+
(7) SHAREHOLDERS' FUNDS
THE FINANCIAL SECRETARY ALSO OPPOSED TO THE VIEW OF UNOFFICIAL MEMBERS THAT THE EMPLOYMENT OVERSEAS OF SHAREHOLDERS' FUNDS SHOULD BE EXCLUDED FROM THE PROFITS TAX CHARGE NET ON BOTH POINTS OF PRINCIPLES AND PRACTICAL CONSIDERATIONS.
THE FINANCIAL SECRETARY'S VIEWS ON POINTS OF PRINCIPLES ARE: * THAT THE BILL IS TO TAX ALL PROF ITS ARISING FROM BUSINESS
CARRIED ON IN HONG KONG AND THIS OBJECTIVE, BASED AS IT IS ON THE TERRITORIAL SOURCE CONCEPT, WOULD NOT BE ACHIEVED IF AN ARTIFICIAL DISTINCTION WERE DRAWN BETWEEN INTEREST FROM ASSETS WHICH ARE CLAIMED TO REPRESENT +SHAREHOLDERS' FUNDS+ AND THOSE WHICH DO NOT-
*
*
THAT THE CAPITAL STRUCTURE OF ANY CORPORATION - BE IT A BANK OR A TRADING CORPORATION - SHOULD NOT, IN ITSELF BE A FACTOR IN DETERMINING THE QUESTION OF TAX LIABILITY. THUS TO DISTINGUISH BETWEEN INTEREST EARNED ON SHAREHOLDERS' FUNDS AND INTEREST EARNED ON OTHER FUNDS WOULD DISCRIMINATE AGAINST FINANCIAL INSTITUTIONS WHICH RELY ON LOAN CAPITAL AS AGAINST SHARE CAPITAL-
THAT TO DRAW A DISTINCTION BETWEEN ASSETS REPRESENTING SHAREHOLDERS' FUNDS AND ASSETS REPRESENTING DEPOSITORS' AND OTHER CREDITORS' FUNDS IS A LEGAL AND PRACTICAL IMPOSSIBILITY- AND
THAT THE POSITION