WEDNESDAY, MAY 30, 1984
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SIR JOHN SAID THAT THE BILL TABLED BEFORE THE COUNCIL TODAY REFLECTED CHANGES WHICH THE GOVERNMENT HAD AGREED SHOULD BE MADE TO IT.
IN MOVING THE SECOND READING OF THE BILL, HE SAID THE CHANGES HAD +EMANATED FROM MOST HELPFUL DISCUSSIONS WHICH HAVE TAKEN PLACE WITH A LEGISLATIVE COUNCIL AD HOC GROUP, WITH WHOM AGREEMENT HAS BEEN REACHED ON THE ACCEPTABILITY OF VARIOUS REPRESENTATIONS, WHILE RETAINING THE OVERALL PHILOSOPHY OF MY PROPOSALS.+
+ BELIEVE THAT THE CHANGES PROPOSED WILL MEET WITH THE APPROVAL OF THE BUSINESS COMMUNITY IN PARTICULAR, AND THE GENERAL PUBLIC AT LARGE. THEY SEEM TO BE FAIR, SIR JOHN SAID.
SPECIFICALLY, THE REFINEMENTS CONTAINED IN THE BILL:
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MAKE CLEAR THAT THE NEW PROVISIONS WILL APPLY ONLY TO INTEREST PAYABLE OR RECEIVABLE ON OR AFTER APRIL 1, 1984;
PROVIDE THAT THE RELIEF PRESENTLY AVAILABLE TO FINANCIAL INSTITUTIONS IN RESPECT OF FOREIGN TAXES SUFFERED ON INTEREST INCOME BROUGHT TO CHARGE TO TAX WILL BE AVAILABLE TO ALL OTHER CORPORATIONS MANAGED AND CONTROLLED HERE AND TO ALL OTHER PERSONS WHO CARRY ON BUSINESS HERE;
ENSURE THAT THOSE WHO PURCHASE MACHINERY OR PLANT OR STOCK-IN-TRADE ON CREDIT TERMS WILL RECEIVE A FULL DEDUCTION FOR ANY RELATED INTEREST PAYMENTS, PROVIDED THAT THE TRANSACTIONS INVOLVED ARE AT ARMS LENGTH WITH PERSONS WHO ARE NOT CLOSELY CONNECTED TO THE TAXPAYER+; AND
REFINE THE DEFINITION OF AN OVERSEAS FINANCIAL INSTITUTION' TO PROVIDE THE COMMISSIONER OF INLAND REVENUE WITH POWERS TO REFUSE TO RECOGNISE ANY SUCH INSTITUTION IF
HE IS OF THE OPINION THAT IT IS NOT ADEQUATELY SUPERVISED BY A SUPERVISORY AUTHORITY.
SIR JOHN SAID TWO FURTHER ISSUES HAD SURFACED.
+FIRST, THE POINT HAS BEEN MADE THAT INTEREST PAYMENTS IN RELATION TO PUBLICLY LISTED BONDS, ISSUED BEFORE APRIL 1, 1984. OUGHT NOT TO BE SUBJECT TO THE NEW CONDITIONS FOR DEDUCTIBILITY.
+SECOND, IT HAS BEEN SUGGESTED THAT INTEREST INCOME RECEIVED BY AUTHORISED UNIT TRUSTS SHOULD NOT BE SUBJECT TO THE EXTENDED CHARGE TO TAX ON SUCH INCOME ON THE GROUNDS THAT THIS WOULD INHIBIT THE GROWTH OF THE UNIT TRUST INDUSTRY IN HONG KONG, TO THE DETRIMENT OF HONG KONG'S POSITION AS AN INTERNATIONAL FINANCIAL CENTRE.
+ HAVE BEEN ADVISED THAT UNOFFICIAL MEMBERS MAY COMMENT IN THESE TWO SPECIFIC AREAS. IT THUS SEEMS WISE FOR ME TO AWAIT THE IR VIEWS.
+COMMITTEE STAGE AMENDMENTS ARE STILL POSSIBLE. THE GOVERNMENT IS ALWAYS RESPONSIVE TO CONSTRUCTIVE CRITICISM, + SIR JOHN SAID.
DEBATE ON THE BILL WAS ADJOURNED.
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