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But in the past, the Government took the view that the Inland Revenue Ordinance allowed a deduction for foreign withholding tax on income subject to Hong Kong profits tax only for companies which were controlled and managed in Hong Kong, he said. The deduction would not be available to overseas companies operating a branch here.
Nevertheless, during the Budget consultations, the tax, accounting and banking professions had asked the Government to clarify the law so as to provide certainty, he added.
"I, therefore, propose to amend the Inland Revenue Ordinance to reflect the judicial decision and the Department's current practice.
"This will, I hope, offer another inducement to encourage overseas companies to set up branch operations in Hong Kong, thereby strengthening our status as an international financial centre," he said.
End
10-year driving licences to be issued
The Financial Secretary. Mr Donald Tsang, proposed in the Legislative Council today (Wednesday) to issue driving licences valid for 10 years except for those aged over 60.
He also proposed to charge $900 for a 10-year licence. This comprised $520 for the licence fee, and $380 for a 10-year levy to the Traffic Accident Victims Assistance Scheme (which currently charges an annual levy of $38 on driving licence- holders).
He said that this was good value for money because a three-year licence currently cost $864, comprising $750 for the licence fee and $114 for the levy.
The cost of this proposal is $20 million in 1997/98 and $610 million up to 2000/01.
"We now issue driving licences which are valid for one or three years. Regular renewal is somewhat inconvenient to licence-holders, and those who forget can commit an offence by driving without a valid licence." he said.
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