HONG KONG
LEGAL REPORT
THE INLAND REVENUE (AMENDMENT) (NO. 2) ORDINANCE 1986
(No. 19 of 1986)
Enclosure No.
2
This Ordinance implements the 1986 Budget proposals for concessions in respect of profits and personal taxes.
2. Section 15 of the Inland Revenue Ordinance was amended in 1984 to introduce profits tax on interest accruing from the carrying on of a business in Hong Kong, notwithstanding that the funds from which the interest is derived were made available outside Hong Kong. Similar provision was made in the case of gains or profits accruing from transactions in certificates of deposit and bills of exchange.
3. Section 2 restores the former position, namely that interest, gains or profits are chargeable to tax so long as they arise in or are derived from Hong Kong.
4. In the case of financial institutions, interest on offshore funds was already taxable under section 15(1)(i) prior to 1984. Section 2 inserts a provision to ensure that the 1984 extension to gains or profits on transactions in certificates of deposit and bills of exchange will continue to apply to financial institutions.
5. Section 3 is consequential upon section 2. Section 4 provides for modest increases in personal and dependent parent allowances, and section 5 applies the new allowances to provisional salaries tax for 1986-7.
6. Before the Governor assented to the Bill in the name and on behalf of Her Majesty, the Attorney General advised that he could properly do so.
24. May 1986.
ATTORNEY GENERAL'S CHAMBERS,
HONG KONG.
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