XN000022-1995-03-29 — Page 73

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The Bill now before Members seeks to tackle one of the main areas of concern, namely the use of a service company to disguise what is, in substance, an employer- employee relationship. Under this type of arrangement, an individual engaged under employment-like conditions has the remuneration for his services paid, not as a salary to himself, but as a consultancy fee to an interposed company he controls. The fee is then chargeable to profits tax in the hands of the service company which is entitled to a wider range of deductions than would otherwise be available to the individual under salaries tax. In addition, remuneration is provided to the individual by the service company in a tax-efficient manner so as to result in little or no liability to salaries tax.

To counter this type of arrangement, we propose that remuneration paid to a company for services rendered by an individual who controls that company, directly or indirectly, will in future be treated as being income derived by that individual from employment and thus chargeable to salaries tax. However, to ensure that genuine contracts for services are not caught, we propose to exclude arrangements which do not bear common characteristics of contracts of employment or which, in the judgement of the Commissioner of Inland Revenue, are not, in substance, contracts of employment.

Mr President, I move that the debate be now adjourned.

End/Wednesday, March 29, 1995

Dumping at Sea Bill passed

A Bill which sought to localise the provisions of the Dumping at Sea Act 1974 (Overseas Territories) Order 1975 so that existing control on marine dumping activities could continue after June 30, 1997 was passed by the Legislative Council today (Wednesday).

The Dumping at Sea Bill also seeks to address deficiencies in the operation of the existing control scheme and the need to increase penalties.

The Bill specifies that a waste producer should apply for a permit from the authority before commissioning a dumping or incineration act at sea.

An operator engaged by the waste producer to carry out dumping should not take on board waste for dumping unless he is satisfied that the waste producer has a permit as required.