XN000022-1984-03-29 — Page 20

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THURSDAY, MARCH 29, 1984

HE SAID THAT THIS HAD +FAR TOO OFTEN RESULTED IN WASTE OF MANPOWER AND RESOURCES, EXCESSIVE AND UNHEALTHY COMPETITION FOR SPECTATORS AND PARTICIPANTS.

+NOT INFREQUENTLY, RIVALRY BETWEEN GOVERNMENT OFFICES HAS RESULTED IN UNDER UTILISATION OF DISTRICT AMENITIES AND RECREATIONAL FACILITIES, HE SAID.

SAVINGS COULD BE ACHIEVED IN RATIONALISING AND

STREAMLINING THE ORGANISATION AND STAFFING OF THE CULTURAL SERVICES DEPARTMENT AND THE RECREATION AND CULTURE DEPARTMENT PREFERABLY BY COMBINING THEM INTO ONE DEPARTMENT.

FURTHER THOUGHT URGED ON TAX PROPOSALS

*****

THE HON RITA FAN URGED THE FINANCIAL SECRETARY TO FURTHER CONSIDER THE PROS AND CONS OF TWO PROPOSALS REGARDING PROFITS TAX. THE FIRST PROPOSAL IS THAT INTEREST EARNED OVERSEAS WILL BE TAXABLE AND THE SECOND IS THAT WHERE A HONG KONG COMPANY BORROWS FROM AN OVERSEAS COMPANY (OTHER THAN BORROWINGS FROM FINANCIAL INSTITUTIONS), THE INTEREST AND RELATED EXPENSES PAID WILL NOT BE DEDUCTIBLE FOR TAXATION PURPOSES.

+WILL THE ABOVE PROPOSALS OF THE FINANCIAL SECRETARY

BE MISUNDERSTOOD BY OVERSEAS INVESTORS AS TO MEAN THAT HONG KONG IS GOING TO LEVY TAX ON PROFITS ARISING IN OR DERIVED FROM OVERSEAS AND THUS DAMPEN THEIR INTEREST IN INVESTING IN HONG KONG?+ SHE ASKED.

+ IF IT IS DECIDED TO IMPLEMENT THEM, APPROPRIATE EXPLANATIONS SHOULD BE GIVEN IN ORDER NOT TO CONFUSE FOREIGN INVESTORS,+ SHE ADDED.

SHE FELT THE FIRST PROPOSAL TO MAKE INTEREST EARNED OVERSEAS TAXABLE INCOMPATIBLE WITH THE SPIRIT OF THE HONG KONG TAX SYSTEM OF TAXING ONLY PROF ITS ARISING IN OR DERIVED FROM HONG KONG.

SHE SAID THE SECOND PROPOSAL DIFFERED BASICALLY FROM THE PRESENT HONG KONG TAX LEGISLATION.

+ IF THE ABOVE PROPOSALS OF THE FINANCIAL SECRETARY ARE IMPLEMENTED, IT WOULD ADD AN EXTRA BURDEN TO AN OVERSEAS COMPANY WHICH WISHES TO ASSIST ITS HONG KONG SUBSIDIARY TO DEVELOP THE HONG KONG BUSINESS.

+ON THE ONE HAND THE INTEREST PAID BY THE HONG KONG SUBSIDIARY TO ITS OVERSEAS PARENT COMPANY IS NOT DEDUCTIBLE FOR TAX PURPOSES; AND ON THE OTHER HAND THE OVERSEAS PARENT COMPANY WILL HAVE TO PAY TAX ON THE INTEREST RECEIVED IN ITS HOME COUNTRY, SHE SAID.

/AS A

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