With the compliments of Mr. F. Gilbert, Board of Inland
Revenue.
T.2044/44/47
Dear Marker,
18th April, 1947.
12.2
144
Hong Kong Refugee Companies
Since you spoke to Willis of this Department about the withdrawal of the concession relating to refugees, we have received on the 10th April via the Treasury a letter dated 19th March from the China Association (copy enclosed).
I have had a word with Palmer of the Colonial office who says that the China Association's statement that there is no Companies Ordinance now in force in Hong Kong is not correct. I gather that the difficulty is that the Colonial Ordinance contains no provision for re-instatement on the Register of companies which came to the United Kingdom and were struck off the Hong Kong Register.
The underlying suggestion in the attached letter from the China Association is that apart from the concession the Hong Kong companies are automatically liable to United Kingdom tax on their trading profits if they are registered in the United Kingdom as refugees. This is not so. The test for United Kingdom tax purposes is not the place of registration; a company is deemed to reside in the United Kingdom if its business is managed and controlled in the United Kingdom. If the business is managed and controlled in Hong Kong, then the fact that the company is registered in the United Kingdom does not make the company a resident of the United Kingdom for Income Tax purposes.
The letter from the China Association does not say what sort of trade or business is carried on by these refugee companies or who manages and controls them, but you may know because I gather that you have been approached by the Association. If, so far as Hong Kong law is concerned, there is nothing to prevent the control and management of the businesses in the Colony, then the temporary difficulty about the place of registration seems to be of no consequence.
E.H.S. Marker, Esq., C.B.
/Your
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