XN000022-1986-01-17 — Page 5

FRIDAY, JANUARY 17, 1986

(B) THE DELETION OF THE PROPOSAL TO PROHIBIT A DEDUCTION

IN RESPECT OF ALL ACCOUNTING PROVISIONS;

(C) THE INTRODUCTION OF A NARROWER AND MORE OBJECTIVE TEST

FOR DECIDING WHETHER A TRANSACTION COMES WITHIN THE NEW ANTI-AVOIDANCE PROVISIONS;

(D) THE NARROWING OF THE TEST OF PURPOSE FOR DECIDING

WHETHER A CHANGE OF SHAREHOLDING IN A COMPANY SHOULD ENABLE THE COMMISSIONER TO REFUSE TO SET OFF AGAINST CURRENT YEAR PROFITS LOSSES INCURRED IN EARLIER YEARS, AND

(E) THE EXPANSION OF THE CIRCUMSTANCES IN WHICH INTEREST IS

DEDUCTIBLE TO INCLUDE INTEREST PAYABLE ON ALL INTER-GROUP BORROWINGS WHERE THE MONEYS BORROWED AROSE FROM A PUBLIC DEBENTURE ISSUED BY A GROUP COMPANY.

SO FAR AS THE PROPOSALS ON PLANT LEASING WERE CONCERNED THE GOVERNMENT SPOKESMAN POINTED OUT THAT SUCH PROPOSALS WERE NOT INTENDED TO IMPEDE LEASING AT LARGE AS A COMMERCIAL PRACTICE.

+THE LEGISLATION IS AIMED AT TWO CAREFULLY DEFINED TYPES OF LEASING ARRANGEMENTS WHICH EXPERIENCE HAS SHOWN ARE PREDOMINANTLY TAX MOTIVATED AND WHICH HAVE CAUSED A VERY SERIOUS LEAKAGE IN TAX REVENUE. ORDINADY LEASING TRANSACTIONS WILL BE UNAFFECTED BY THE PROPOSALS EMBODIED IN THE BILL, HE SAID.

THE BILL IS SCHEDULED TO BE INTRODUCED INTO THE LEGISLATIVE COUNCIL ON JANUARY 29, WITH FURTHER DEBATE ON FEBRUARY 5.

LAND COMMISSION HOLDS SEVENTH MEETING

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THE SINO-BRITISH LAND COMMISSION HELD ITS SEVENTH MEETING ON JANUARY 16 AND 17. THE TWO SIDES REACHED AGREEMENT ON ACCOUNTING ARRANGEMENTS FOR PREMIUM INCOME FROM LAND TRANSACTIONS.

THE TWO SIDES ALSO REVIEWED WITH SATISFACTION THE PROGRESS MADE BY THE COMMISSION DURING THE FIRST SIX MONTHS OF ITS OPERATION.

DURING THIS PERIOD, THE TWO SIDES, IN THE SPIRIT OF FRIENDLY COOPERATION AND IN ACCORDANCE WITH THE PROVISIONS OF ANNEX III TO THE SINO-BRITISH JOINT DECLARATION, HAVE REACHED AGREEMENT ON A RANGE OF LEGAL DOCUMENTS FOR LAND TRANSACTIONS, THE LAND DISPOSAL PROGRAMME FOR THE 1985-86 FINANCIAL YEAR, THE AVERAGE COST OF LAND PRODUCTION FOR THE YEAR AND THE ACCOUNTING ARRANGEMENTS FOR PREMIUM INCOME.

THESE AGREEMENTS ARE BENEFICIAL TO THE OPERATION OF THE PROPERTY MARKET, ECONOMIC DEVELOPMENT AND LAND ADMINISTRATION IN HONG KONG.

THE NEXT MEETING OF THE COMMISSION WILL BE HELD IN MARCH, TO DISCUSS THE LAND DISPOSAL PROGRAMME FOR THE 1986-87 FINANCIAL YEAR.

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