TNAG-2472-FCO40-3599-Confidential-talks-between-the-UK-and-China-regarding-financ-1992 — Page 32

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Paper 6 (8.60X13)

actual

vised estimate

Table D shows that the deviation of

internal revenue from the

ranged from -0.98 in 1990-91 to 9:38 in 1987-88 resulting from higher för lower than expected earnings and profits tax and higher yield from stamp duty. Actual stamp duty yield has been higher than the revised estimates in the last five years the deviation ranged from +2.4% in

1990-91 to +7.58 in 1991-92.

3. Earnings (Salaries and profits tax

on salaries tax in the last five.

very close to the revised

Actual outturni

years has been

estimate.

The major

constraint encountered in forecasting

profits tax is

the dependance of the level of

receipts on · external factors, including the

economic situation OF Hong Kong's trading

partners, inflation and siness confidence.

Another factor is the difficulty of forecasting revenue reduction attributable to hold-over

claims and discharges of tax. About 50% of the

revenue concerned only Fall due: for payment between January and March the last quarter of

the financial year. Moreover, since hold-over

claims need only be lodged 2 weeks before the

due date for payment, the revenue position can change quickly and unpredictably.