- 5
13.. suggest that this expression should be used in the amending Bill and, indeed, as it is not sufficiently precise for legal purposes, the Bill has been drafted in a positive way rather than by introducing a sweeping charge and then providing for exclusions. In other words, it will be a question of fact whether the interest arises from the carrying on of a business in Hong Kong.
14.
Notwithstanding this, if it is shown, on the facts of a particular case, that the profits from interest arise partly from the business in Hong Kong and partly from the substantial intervention of an overseas branch, a reasonable apportionment of the profits will have to be made. But cases of apportionment will be few in relation to the number of transactions as a whole. It follows that, where there
has been substantial intervention of an overseas branch resulting in profits being wholly attributable to that branch, no part of the profits will be chargeable to tax in Hong Kong and, in any event, if in the administration of the law as amended, an institution considers that the Commissioner is misinterpreting it, the usual channels of objection and appeal will be open to it.
The Review Committee did not, however,
15.
To sum up then: I believe that the Review Committee's recommendation, which has been endorsed by the Government, is reflected in the Bill as drafted.
16.
Fourthly, as regards the definition of a financial institution in the Bill, despite contentions to the contrary, I believe that the definition is not cast wider than the recommendation of the Review
Committee that the amended charge should apply not only to the activities of licensed banks, but also to those of institutions which engage in deposit-taking
and related business.
/17.....
Page 15Page 16
No comments yet.
Private notes are available after approval.