3
WEDNESDAY, MARCH 12, 1986
+LASTLY, BUT JUST AS IMPORTANTLY, IT CONTAINS SUFFICIENT SAFEGUARDS AGAINST ABUSE OF POWER BY THE INLAND REVENUE DEPARTMENT,+ HE SAID.
MR POON SAID IT WAS ENVISAGED THAT THE COMMISSIONER OF INLAND REVENUE WOULD EXERCISE HIS POWER UNDER SUCH ANTI-AVOIDANCE
LEGISLATION MAINLY AGAINST BLATANT TAX-AVOIDANCE SCHEMES OR CONTRIVED TRANSACTIONS.
THE NEW SECTIONS 61A AND 618 WERE BOTH SUBJECT TO THE OVERRIDING REQUIREMENT THAT THE SOLE AND DOMINANT MOTIVE' WAS TAX-AVOIDANCE AND THEREFORE SHOULD NOT AFFECT GENUINE BUSINESS TRANSACTIONS OR TRANSACTIONS NOT ENTERED INTO PRINCIPALLY WITH TAX AVOIDANCE MOTIVE, OR PROPER DEDUCTIONS OR ALLOWANCES UNDER THE INLAND REVENUE ORDINANCE, HE NOTED.
AS FAR AS LEASING WAS CONCERNED, HE SAID THE NEW SECTION 39E WOULD ONLY AFFECT THE TWO TYPES OF TAX-BASED LEASING MENTIONED THEREIN, WHICH IF UNABATED, WOULD CONTINUE TO RESULT IN HUGE TAX DEFERRAL AND POSSIBLY IN SOME CASES EVENTUAL LOSS OF REVENUE TO THE GOVERNMENT.
+ I HAVE BEEN ASSURED BY THE COMMISSIONER THAT IF THE BILL IS PASSED, THE ANTI-AVOIDANCE PROVISION WOULD BE USED WITH PROPER DISCRETION AND ONLY WHEN IT IS REALLY NECESSARY.
+ I BELIEVE THE DETERRENT EFFECT OF SUCH PROVISIONS IS OF GREAT VALUE IN PROTECTING OUR TAX REVENUE.
+THERE SHOULD BE NO FEAR THAT WE WILL CREATE A TAX MONSTER, OTHER COUNTRIES HAVE MUCH MORE DRASTIC AND COMPLICATED ANTI-AVOIDANCE LEGISLATION,+ HE SAID.
J
HOWEVER, HE STRESSED THAT IT WAS EXTREMELY IMPORTANT THAT THE PRACTICE NOTES ON THE NEW LEGISLATION CONTAINING GENERAL GUIDELINES INCLUDING TAX CLEARANCE PROCEDURES SHOULD BE ISSUED BY THE INLAND REVENUE DEPARTMENT AS SOON AS POSSIBLE.
EARLIER IN HIS SPEECH, MR POON RECALLED THAT THE BILL WAS PUBLISHED IN DRAFT FORM IN JULY 1985 AND AN UMELCO AD HOC INLAND REVENUE REVIEW PANEL WAS FORMED SOON AFTER TO STUDY THE BILL AND TO RECEIVE REPRESENTATIONS.
THE GROUP RECEIVED OVER 40 REPRESENTATIONS AND HELD MEETINGS WITH INTERESTED PARTIES AND THE ADMINISTRATION RESULTING IN THE GROUP MAKING A NUMBER OF RECOMMENDATIONS ON THE DRAFT BILL.
PRACTICALLY ALL THESE RECOMMENDATIONS HAD BEEN ACCEPTED BY
THE ADMINISTRATION.
THE BILL IN ITS PRESENT FORM WAS PUBLISHED ON JANUARY 17, 1986 AND A LEGISLATIVE COUNCIL AD HOC GROUP WITH MR POON AS THE CONVENER WAS FORMED TO STUDY IT.
/EIGHT REPRESENTATIONS