XN000022-1986-03-12 — Page 6

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WEDNESDAY, MARCH 12, 1986

EIGHT REPRESENTATIONS HAD SINCE BEEN RECEIVED AND THE GROUP HAD CAREFULLY STUDIED ALL THE SUGGESTIONS MADE AND HAD HAD DISCUSSIONS WITH THE ADMINISTRATION.

APART FROM THE MINOR AMENDMENT TO CLAUSE 4 OF THE BILL ON DEDUCTIONS ALLOWED IN RESPECT OF INTEREST ON DEBENTURES OF SIMILAR INSTRUMENTS, MR POON SAID IT WAS FELT THAT THERE WERE NO NEW EVIDENCE OR SPECIAL CIRCUMSTANCES WHICH WOULD JUSTIFY FURTHER AMENDMENTS.

ALSO SPEAKING IN SUPPORT OF THE MOTION, THE HON RITA BAN SAID SHE BELIEVED THE BILL WAS NEEDED FOR HONG KONG.

SHE COMPLIMENTED THE ADMINISTRATION AND THE BUSINESS COMMUNITY FOR THE LEVEL OF UNDERSTANDING AND CO-OPERATION THEY ACHIEVED IN THE FORMULATION OF THIS BILL.

HOWEVER, SHE NOTED THAT THOUGH THE OBJECTIVE OF THE BILL WAS WELL SUPPORTED BY THE COMMUNITY THERE WERE STILL CONCERNS AMONG THE BUSINESS COMMUNITY THAT SECTION 61A AND B MIGHT BE APPLIED IN SUCH A MANNER THAT GENUINE COMMERCIAL TRANSACTIONS COULD BE CAUGHT, THUS RESULTING IN COMPLICATIONS AND UNFORESEEN LIABILITIES.

SHE SAND IT WOULD EASE PEOPLE'S DOUBT IF THE ADMINISTRATION AS ABLE TO CONFIRM THAT GENUINE INTRA-GROUP REGROUPINGS OR INTER-COMPANY TRANSFER OF PROFIT WOULD NOT BE CAUGHT BY THESE SECTIONS UNLESS THERE WAS A CLEAR TAX AVOIDANCE PURPOSE.

SHE POINTED OUT THAT THE OPPORTUNITY FOR FURTHER CLARIFICATION SE MADE WAS IN THE INLAND REVENUE DEPARTMENT'S PRACTICE NOTES.

THE PRACTICE NOTES WERE ACCORDED A HIGH STATUS BY THE PROFESSIONALS AND BUSINESS COMMUNITY AND WERE CONSIDERED TO

THE RULES OF THE GAME, MRS FAN OBSERVED.

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+ IF THE RULES ARE NOT CLEAR, OR THE RULES ARE NOT SEEN AS FAIR AND EQUITABLE, THEN THE PRUDENT BUSINESSMEN SIMPLY WILL NOT PLAY THE CAME.

+ON THE OTHER HAND, IF THE RULES ARE PERCEIVED TO REFLECT THE ACTUAL LAW, BOTH IN LETTER AND IN SPIRIT, THEN THE CONFIDENCE OF THE BUSINESSMEN WILL BE FURTHER STRENGTHENED BOTH LOCALLY AND INTERNATIONALLY, SHE SAID.

+1F THE BUSINESS COMMUNITY PERCEIVES AND ACCEPTS THESE NOTES AS REASONABLE, EQUITABLE AND CLEAR, THEN ANY LINGERING DOUBTS ABOUT THE INTENTIONS, OF THE ADMINISTRATION FOR ENACTING THESE ANTI-TAX- AVOIDANCE KEGISLATION CAN BE EFFECTIVELY REMOVED, SHE ADDED.

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