XN000022-1991-04-17 — Page 51

WEDNESDAY, APRIL 17, 1991

49

GOVT MOVES TO COUNTER TAX AVOIDANCE

THE

FINANCIAL SECRETARY, SIR PIERS JACOBS, ANNOUNCED IN THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY) THAT HE PROPOSES ΤΟ SEEK AMENDMENT TO THE INLAND REVENUE ORDINANCE TO PREVENT EXPLOITATION SECTION 16E.

OF

THIS PROVISION CURRENTLY ALLOWS A DEDUCTION IN RESPECT OF EXPENDITURE INCURRED ON THE PURCHASE OF PATENT RIGHTS, OR RIGHTS TO ANY TRADE MARK OR DESIGN FOR USE IN HONG KONG.

A SPOKESMAN OF THE INLAND REVENUE DEPARTMENT SAID THE PROVISION WAS INTRODUCED AS A CONCESSION IN 1983 WITH THE INTENTION THAT IT WOULD ACT AS AN INCENTIVE FOR LOCAL INDUSTRIES TO UPGRADE TECHNOLOGY.

HOWEVER, ARRANGEMENTS HAVE EMERGED SEEKING TO USE THE PROVISION TO OBTAIN SUBSTANTIAL TAX BENEFITS WITHOUT INVOLVING IN ANY REAL SENSE AN UPGRADING OF TECHNOLOGY.

THE PROPOSED AMENDMENTS, THE SPOKESMAN SAID, WOULD DEFINE MORE STRINGENTLY THE TYPES OF EXPENDITURE WHICH WOULD QUALIFY FOR DEDUCTION.

"IN ESSENCE, DEDUCTION WOULD BE RESTRICTED TO EXPENDITURE PATENT RIGHTS AND ON INDUSTRIAL INFORMATION AND TECHNIQUES LIKELY ASSIST IN THE MANUFACTURE OR PROCESSING OF GOODS OR MATERIALS.

ON

ΤΟ

"AS A FURTHER MEASURE TO COUNTER EXPLOITATION, DEDUCTIONS WOULD DENIED IN RESPECT OF TRANSACTIONS BETWEEN ASSOCIATED PARTIES,' HE

BE SAID.

THE

SPOKESMAN SAID SUBJECT TO THE PROPOSED AMENDMENTS BEING PASSED BY THE LEGISLATIVE COUNCIL, THE NEW CRITERIA WOULD APPLY IN RELATION то CONTRACTS ENTERED INTO ON OR AFTER TOMORROW, APRIL 18, 1991.

ON THE TOPIC OF TAX AVOIDANCE GENERALLY, THE SPOKESMAN SAID THE DEPARTMENT CONTINUES TO MONITOR THE SITUATION AND, WHERE IT IS CONSIDERED NECESSARY, WILL SEEK THE INTRODUCTION OF FURTHER MEASURES TO PROTECT THE REVENUE.

RELAXATION OF FUND-RAISING RULES

THE GOVERNMENT TODAY (WEDNESDAY ANNOUNCED NEW PROPOSALS AIMED AT RELAXING EXISTING ARRANGEMENTS FOR THE COLLECTION OF DONATIONS PUBLIC PLACES.

IN

AT PRESENT, ARRANGEMENTS UNDER THE SUMMARY OFFENCES ORDINANCE DO NOT PROVIDE FOR FUND-RAISING ACTIVITIES FOR POLITICAL PURPOSES PUBLIC PLACES.

IN

/THE SUMMARY