XN000022-1976-02-28 — Page 3

Saturday, February 28, 1976

Commenting on the appointment of the Review Committee, the

Financial Secretary, Mr. Philip Haddon-Cave said that an examination of the

basic structure of the Inland Revenue Ordinance was necessary to make it

more productive of revenue in the interests of maintaining tax rates as

low as possible. At the same time, he said, "our direct tax system must

be simple and inexpensive to administer."

dictate

The terms of reference of the Committee are as follows:

Having regard to the economic circumstances of Hong Kong which

(a)

a comparatively low level of direct taxation;

(b)

that the system at given tax rates should be as productive

of revenue as possible; and

(c) that the relevant legislation should be simple and

inexpensive to administer;

To consider the present system of taxation of profits and other

forms of income contained in the Inland Revenue Ordinance, and in particular

(a) the system of voluntary aggregation under Personal Assessment;

(b) the taxation of husbands and wives;

(c) the treatment of dividends and its relation to the taxation

of corporate profits;

(d) the treatment of interest and the relief for interest paid;

(e)

the territorial ambit of the various charges (having regard,

inter alia, to the effects of changing commercial practices

and recent case law);

:

the tuxation of benefits in kind;

(1)

(g)

the notional basis of the property tax charge;

(h) the taxation of specific classes of taxpayer, including

profits from shipping;

(i) the adequacy of existing relief for expenses incurred by

businesses and employees.

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