WEDNESDAY, MARCH 3, 1993
28
PROPOSAL FOR COMPOSITE TAX RETURNS
THE FINANCIAL SECRETARY, THE HON HAMISH MACLEOD, TOLD THE COUNCIL TODAY (WEDNESDAY) HE PROPOSED TO INTRODUCE A COMPOSITE TAX RETURNS OR CTRS, WITH EFFECT FROM APRIL 1.
LEGISLATIVE SYSTEM 1994.
OF
A CTR WILL BE A SINGLE RETURN COVERING ALL TAXES LEVIED UNDER THE INLAND REVENUE ORDINANCE.
"I SHOULD EMPHASISE THAT NO ONE'S TAX LIABILITY WILL INCREASE AS A RESULT
* OF THIS MEASURE, MR MACLEOD SAID IN PRESENTING HIS 1993/94 BUDGET.
DUE.
H "IT WILL AFFECT NEITHER THE RATES OF TAX NOR THE AMOUNTS ITS PURPOSE IS SIMPLY TO MAKE LIFE EASIER FOR THE TAXPAYER AND TO REDEPLOY CONSIDERABLE RESOURCES IN THE INLAND REVENUE DEPARTMENT ΤΟ COMBATING TAX AVOIDANCE AND EVASION.
"SOME OF THE MEASURES I HAVE ANNOUNCED TODAY WILL FURTHER SIMPLIFY WHAT IS ALREADY ONE OF THE MOST STRAIGHTFORWARD AND LEAST ONEROUS
TAX SYSTEMS IN THE WORLD. BUT I HAVE SOME ADDITIONAL MEASURES WHICH I BELIEVE WILL FURTHER IMPROVE OUR TAX ADMINISTRATION.
++
"BECAUSE WE TAX PROFITS, SALARIES AND PROPERTY SEPARATELY, A TAXPAYER MAY HAVE TO COMPLETE UP TO THREE SEPARATE RETURNS AND, POSSIBLY, A PERSONAL ASSESSMENT. IN 1991/92, SOME 300,000 TAXPAYERS HAD TO FILL IN TWO OR MORE RETURNS, AT SOME INCONVENIENCE ΤΟ THE INDIVIDUAL AS WELL AS AN UNNECESSARY PAPERCHASE FOR THE INLAND REVENUE DEPARTMENT.
MR MACLEOD SAID HE WAS COMMITTED TO CLOSING
LOOPHOLES AS THEY CAME TO LIGHT.
SIGNIFICANT TAX
"ONE RECENT AREA OF CONCERN RELATES TO SECTION 21A OF THE INLAND REVENUE ORDINANCE. THIS PROVIDES THAT ONLY 10% OF CERTAIN PAYMENTS, SUCH AS ROYALTIES FOR THE USE OF INTELLECTUAL PROPERTY, ARE TREATED AS ASSESSABLE TO PROFITS TAX.
PROVISION
BY
"SOME HONG KONG COMPANIES ARE EXPLOITING THIS ENTERING INTO ARRANGEMENTS WITH OVERSEAS ASSOCIATES TO REDUCE THEIR PROFITS TAX LIABILITY.
**A BILL TO CLOSE THIS LOOPHOLE WILL BE INTRODUCED INTO THIS COUNCIL AS PART OF THE BUDGET PACKAGE. THE BILL WILL PROVIDE THAT WHERE A RELEVANT PAYMENT IS PAID OR CREDITED BY AN ASSOCIATE, THE FULL AMOUNT (RATHER THAN THE PRESENT 10%) WILL BE TREATED AS ASSESSABLE PROFITS. IN ORDER TO PREVENT POSSIBLE REVENUE LOSS, THIS LEGISLATION WILL HAVE EFFECT FROM TOMORROW."
MR MACLEOD SAID HE HAD REFERRED LAST YEAR TO THE NEED TO REFORM THE SYSTEM OF FIRST REGISTRATION TAX. AT PRESENT, SOME MOTOR VEHICLE IMPORTERS COULD REDUCE THEIR TAX LIABILITY BY ARTIFICIALLY DEPRESSING THE IMPORT PRICE OF VEHICLES.
/"PREPARING THE