TNAG-1449-FCO40-1953-Minutes-and-Hansards-of-the-Legislative-Council-of-Hong-Kong-1986 — Page 210

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in some tax benefit. In this connection, genuine intra-group regroupings or inter-company transfer of profit would not be

caught by these sections, especially in view of the fact that

there is no privision in group relief in our tax system.

ease people's doubt if the Administration is able to confirm that this is in fact the main spirit of the said legislation.

It would

The opportunity for further clarification to be made is

in the Inland Revenue Department's Practice Notes. It is

appreciated that the Practice Notes are internal documents used as guidelines by Departmental staff, and the final interpretation of the legislation is a point of law and therefore rest with the

Courts. Yet realizing that considerable cost and time is needed

in bringing a case before Court, few parties are keen to pursue

this course of action unless there is no other viable option.

Under these circumstances, Practice Notes are studied with a very fine comb, and given a status by the professionals and business community which is perhaps higher than originally intended by the

Revenue. The fact of life is Practice Notes are considered to be

the Rules of the Game. 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 game. 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 enhanced, and the creditability and reputation of Hong Kong Government will be further strengthened both locally and internationally. This present Bill has regained some confidence of the business community. However, the proof of the pudding is in the eating. The Practice Notes is the first stage of the eating process.

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 legislation can be effectively removed.

Sir, with these remarks, I support the motion.

If

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