XN000022-1985-07-19 — Page 5

FRIDAY, JULY 19, 1985

DRAFT BILL TO COMBAT TAX AVOIDANCE

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A DRAFT BILL WHICH SEEKS TO PROVIDE THE COMMISSIONER OF INLAND REVENUE WITH MORE EFFECTIVE POWERS TO FIGHT TAX AVOIDANCE WAS PUBLISHED IN THE GAZETTE TODAY (FRIDAY) FOR PUBLIC INFORMATION.

THE INLAND REVENUE (AMENDMENT)(NO. 4) BILL 1985 MAINLY LAYS DOWN THE LEGAL FRAMEWORK FOR THE IMPLEMENTATION OF ANTI-TAX AVOIDANCE AND TAX DEFERRAL PROPOSALS MADE BY THE FINANCIAL SECRETARY IN HIS BUDGET SPEECH IN FEBRUARY THIS YEAR.

A GOVERNMENT SPOKESMAN SAID THAT IN VIEW OF THE LENGTH AND COMPLEXITY OF THE PROVISIONS, IT WAS FELT THAT THEY SHOULD BE PUBLISHED IN DRAFT FORM SO THAT PROFESSIONAL BODIES AND THE PUBLIC COULD COMMENT ON THEM BEFORE THE BILL'S INTRODUCTION INTO THE LEGISLATIVE COUNCIL.

+ AMENDMENTS CAN THEN BE MADE IF NECESSARY BEFORE THE BILL GOES THROUGH THE LEGISLATIVE PROCESS, + HE SAID.

TO ENABLE MEMBERS OF THE COMMUNITY TO HAVE MORE TIME TO STUDY THE BILL IN DETAIL, CLOSING DATE FOR SUBMISSIONS IS SEPTEMBER 10, 1985.

EXPLAINING THE PROVISIONS, THE SPOKESMAN SAID THE BILL, IF ENACTED, WOULD GIVE EFFECT TO THE FOLLOWING PROPOSALS MADE BY THE FINANCIAL SECRETARY IN HIS BUDGET SPEECH:

(A) TO IMPROVE THE EXISTING GENERAL ANTI-AVOIDANCE

PROVISIONS CONTAINED IN SECTION 61 OF THE PRINCIPAL ORDINANCE WITH LEGISLATION WHICH WILL PROVIDE THE COMMISSIONER WITH MORE EFFECTIVE ANTI-AVOIDANCE POWERS;

(B) TO LIMIT THE OPPORTUNITIES FOR TAX DEFERRAL THROUGH

LEVERAGED LEASING ARRANGEMENTS FOR EQUIPMENT USED OFF-SHORE AND SO-CALLED SALE AND LEASE-BACK' DEVICES IN GENERAL;

(C) TO NARROW THE SCOPE FOR MANIPULATION OF THE PROFITS

TAX EXPENSE DEDUCTIONS PROVISIONS FOLLOWING A 1983 PRIVY COUNCIL DECISION; AND

(D) TO INTRODUCE SOME RELATIVELY MINOR TECHNICAL CHANGES

TO THE PRINCIPAL ORDINANCE.

REFERRING TO THE BACKGROUND OF THE PROPOSALS, THE SPOKESMAN SAID THE INLAND REVENUE DEPARTMENT HAD, IN RECENT YEARS, SEEN INCREASING EVIDENCE OF TAX AVOIDANCE AND TAX DEFERRAL DEVICES BEING UNDERTAKEN BY TAX-PAYERS AT A CONSIDERABLE ANNUAL COST TO THE TREASURY.

/+THESE DEVICES