XN000022-1974-12-19 — Page 2

THURSDAY, DECEMBER 19, 1974/

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PROVISIONAL PROFITS TAX EXPLAINED

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THE DEPUTY COMMISSIONER OF INLAND REVENUE, MR. VICTOR LADD, TODAY CLARIFIED ASPECTS OF THE PROPOSED PROVISIONAL PROFITS TAX SYSTEM WHICH HAD BEEN THE SUBJECT OF. ADVERSE COMMENT FROM VARIOUS CHAMBERS OF COMMERCE AND OTHER ORGANISATIONS.

HR. LADD SAID THE HAIN COMPLAINTS AGAINST THE INLAND REVENUE (AMENDMENT) (NO. 3) BILL 1974 HAVE BEEN TO THE EFFECT THAT

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BUSINESS WILL HAVE TO PAY MORE TAX-

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BUSINESSES WILL HAVE TO PAY TAX A YEAR OR MORE IN ADVANCE-

THE TIMING OF THE BILL IS BAD BECAUSE HONG KONG 15 IN THE THRDES OF AN ECONOMIC RECESSION WITH BUSINESS PROFITS GENERALLY LOVER IN 1974/75 THAN THEY WERE IN 1973/74

+TAKING THESE THREE POINTS OF CRITICISM IN ORDER

BUSINESSES WILL HAVE TO PAY MORE - AS A GENERALISATION THIS IS SIMPLY NOT TRUE. IT IS CERTAINLY TRUE THAT THE PRESENT SYSTEM CAN OPERATE AGAINST MANY TAXPAYERS WHO CAN AND DO PAY CONSIDERABLY MORE PROFITS TAX THAN THEIR ACTUAL PROFITS WARRANT DURING THE LIFE OF THEIR BUSINESS.

+THE NEW SYSTEM ON THE OTHER HAND IS PRECISE, EXACT AND CAN BE RELIED ON TO ENSURE THAT THE TAX PAID BY A BUSINESSMAN DURING THE LIFE OF HIS BUSINESS IS DIRECTLY RELATED TO THE PROFITS HE MAKES.

+BUSINESSES WILL HAVE TO PAY TAX A YEAR OR MORE IN ADVANCE THIS, AGAIN, 15 SIMPLY NOT TRUE. THE BILL RETAINS THE PRESENT *PAY AS YOU GO+ PRINCIPLE AND THERE IS ABSOLUTELY NO QUESTION OF PAYING IN ONE YEAR ON ACCOUNT OF THE NEXT.

+THE EXPRESSION PROVISIONAL TAX HAS, POSSIBLY, CAUSE D SOME CONFUSION BUT THERE IS NOTHING SINISTER ABOUT IT PROVISIONAL TAX IS NO MORE THAN A PAYMENT ON ACCOUNT OF THE CURRENT YEAR'S TAX LIABILITY WITHIN THE CURRENT YEAR. THE PAYMENT ON ACCOUNT BEING CALCULATED BY REFERENCE TO THE PREVIOUS YEAR'S PROFITS.

+IN FACT, IN TIMES OF RISING PROFITS THERE WILL BE A BALANCE OF FINAL TAX TO PAY IN THE FOLLOWING YEAR WHEN THE ACTUAL RESULTS ARE KNOWN, SO THAT THERE IS IN FACT AN ELEMENT OF PAYMENT IN ARREARS UNDER THE NEW SYSTEM.

THE TIMING OF