Bill to amend to Inland Revenue Ordinance
The Inland Revenue (Amendment)(No 3) Bill will be gazetted on Friday (November 17).
At present, the Inland Revenue Ordinance only allows the Government to tax income that is sourced in Hong Kong.
The Bill seeks to amend the Ordinance to permit the Government to tax the income from international traffic of Hong Kong airlines sourced in an agreement country which will be granted tax relief in the agreement country. In return, the Government will forgo the right to tax the income of airlines of the agreement country sourced in Hong Kong if this is subject to tax in the agreement country.
"The airlines therefore will not suffer from double taxation," a government spokesman said today (Wednesday).
"It is our policy to seek to include provisions on double taxation relief for airline income into Air Services Agreements which we have negotiated with our bilateral aviation partners on a case by case basis, subject to the endorsement of the Chinese side," the spokesman explained.
The Secretary for the Treasury will introduce the Amendment Bill into the Legislative Council on November 29.
In parallel, the Government is preparing a draft model text of a comprehensive Double Taxation Agreement (DTA) based on the model adopted by the Organisation for Economic Co-operation and Development and drawing reference from DTAs concluded by China and other countries, with appropriate modifications to suit Hong Kong's own circumstances.
However, there are no immediate plans to negotiate free-standing DTAs with other territories.
"This is a complex issue and we will have to consider carefully the wider implications for the Hong Kong economy," the spokesman said.
End/Wednesday, November 15, 1995