XN000022-1974-11-15 — Page 2

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FRIDAY, NOVEMBER 15, 1974.

CHANGE IN BASIS OF PROFITS TAX ASSESSMENT PROPOSED

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BUSINESSMEN WILL BECOME LIABLE TO A PROVISIONAL PROFITS TAX NEXT YEAR AND WILL BE ASSESSED ON THE SAME CURRENT YEAR BASIS AS SALARIES TAXPAYERS, IF DRAFT LEGISLATION GAZETTED TODAY IS ACCEPTED.

THE CHANGE IN THE BASIS OF PROFITS TAX ASSESSMENT IS PROVIDED IN THE INLAND REVENUE (AMENDMENT) (NO. 3) BILL WHICH SETS APRIL 1, 1975 AS THE TARGET DATE FOR THE CHANGEOVER.

FROM THAT DATE, PROFITS TAX WILL BE DETERMINED ON ACTUAL PROFITS MADE IN THE CURRENT YEAR OF ASSESSHENT, INSTEAD OF DEING BASED ON ASSESSMENTS OF PROF 116 IN THE PREVIOUS YEAR AS IS NOW THE CASE.

AT THE SAME TIME, PERSONS CHARGEABLE TO PROFITS TAX IN ANY YEAR OF ASSESSMENT WILL HAVE TO PAY A PROVISIONAL PROFITS TAX CALCULATED, IN THE CASE OF A CONTINUING BUSINESS, LY REFERENCE TO ASSESSABLE PROFITS FOR THE PRECEDING YEAR OF ASSESSMENT.

THE PROPOSALS ARE IN LINE WITH A RECOMMENDATION BY THE INLAND REVENUE ORDINANCE REVIEW COMMITTEE AND FULFILL AN UNDERTAKING GIVEN BY THE FINANCIAL SECRETARY IN HIS 1973 BUDGET SPEECH.

COMMENTING ON THE MERITS OF THE SCHEME, A GOVERNMENT SPOKESMAN SAID THAT TO ASSESS BUSINESS PROPRIETORS TO TAX BY REFERENCE TO THEIR ACTUAL PROFITS FOR THE YEAR OF ASSESSMENT IS LOTH LOGICAL AND MUCH FAIRER THAN THE EXISTING SYSTEM WHICH DOES PRODUCE INEQUITIES TO THE TAXPAYER AND TO THE REVENUE IN VARYING SITUATIONS,

+FURTHER, THE NEW BASIS WILL BRING PROFITS TAX IN THE LINE WITH PROPERTY TAX, INTEREST TAX AND SALARIES TAX, ALL OF WHICH ARE PRESENTLY ASSESSED ON THE CURRENT YEAR BASIS.

+THE CONFUSION ARISING FROM COMPUTING PERSONAL ASSESSMENT, WHERE IT APPLIES, ON A MIXTURE OF CURRENT YEAR'S INCOME AND PREVIOUS YEAR'S INCOME WILL ALSO BE REMOVED, THE SPOKESMAN SAID.

IN THE FIRST YEAR UNDER THE NEW BASIS (1975/76) THE PROVISION- AL TAX WILL BE BASED ON ACTUAL PROFITS MADE IN 1974/75, FINAL TAX PAYABLE FOR 1975/76 BEING ASCERTAINED IN 1976/77 WHEN THE ACTUAL PROFITS FOR 1975/76 ARE KNOWN,

PROVISION IS ALSO MADE FOR PART OR THE WHOLE OF THE PROVISION- AL PROFITS TAX TO BE HELD OVER IF THE TAXPAYER CAN SHOW:

* THAT HIS ACTUAL PROFIT IS LIKELY TO BE LESS THAN 80 PER

CENT OF THE SUM ON WHICH THE PROVISIONAL TAX WAS CALCULATED, OR

*

THAT HIS PROFIT IS REDUCED BECAUSE OF CESSATION OF BUSINESS, OR

THAT A