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(CHAPTER 112)CONTENTS

(CHAPTER 112)CONTENTS Section PART I INTRODUCTORY 1. Short title 2. Interpretation 3. Establishment of Board of Inland Revenue. Power of Governor to appoint a Commissioner and other officers 3A. Exercise of powers and duties 4. Official secrecy PART II PROPERTY TAX 5. Charge of property tax 5A. Ascertainment of assessable value 5B. Ascertainment of assessable value on or after 1 April 1983 6. (Repealed) 7. Reduction and refund in case of unoccupied property 7A. Interpretation 7B. Claims for refund of property tax 7C. Bad debts PART III SALARIES TAX 8. Charge of salaries tax 9. Definition of income from employment 10. Salaries tax on spouses to be paid separately unless they elect to be jointly assessed 11. The time and manner in which an election or the withdrawal of an election for joint assessment is to be made 11A. (Repealed) 11B. Ascertainment of assessable income 11C. Office or employment of profit 11D. Receipt of income 12. Adjustments to assessable income 12A. Treatment of losses 12B. Ascertainment of net chargeable income 12BA. Charitable donation 13. Calculation of salaries tax PART IV PROFITS TAX 14. Charge of profits tax 15. Certain amounts deemed trading receipts 15A. Transfer of right to receive income 15B. (Repealed) 15C. Valuation of trading stock on cessation of business 15D. Post-cessation receipts and payments 16. Ascertainment of chargeable profits 16A. Special payment under an approved retirement scheme allowable as a deduction 16B. Expenditure on scientific research 16C. Payments for technical education 16D. Approved charitable donations 16E. Purchase and sale of patent rights, etc.

17. Deductions not allowed 18. Basis for computing profits 18A. Assessable profits for the year of assessment 1974/5 18B. Basis for computing assessable profit for years of assessment commencing on 1 April 1975 18C. Commencement of source of profits in years of assessment commencing on or after 1 April 1974 18D. Cessation of source of profits in years of assessment commencing on 1 April 1975 18E. Change of accounting date and apportionments 18F. Adjustment of assessable profits 19. Treatment of losses 19A. Computation of losses 19B. Approved charitable donations 19C. Treatment of losses after 1 April 1975 19D. Computation of losses after 1 April 1975 19E. Adjustment of losses 20. Liability of certain non-resident persons 20A. Persons chargeable on behalf of a non-resident 20B. Persons chargeable in respect of certain profits of a non-resident 21. Assessable profits of certain businesses to be computed on a percentage of the turnover 21A. Computation of assessable profits from cinematograph films, patents, trademarks, etc.

22. Assessment of partnerships 22A. Ascertainment of share of partnership profits or losses 22B. Limited partner loss relief 23. Ascertainment of assessable profits of life insurance corporations 23A. Ascertainment of assessable profits of insurance corporations other than life insurance corporations 23AA. Mutual insurance corporations 23B. Ascertainment of the assessable profits of a ship-owner carrying on business in Hong Kong 23C. Ascertainment of the assessable profits of a resident aircraft-owner 23D. Ascertainment of the assessable profits of a non-resident aircraft- owner 23E. Alternative computation of "total shipping profits" and "total air- craft profits" 24. Clubs, trade associations, etc.

25. Deduction of property tax from profits tax.

26. Exclusion of certain dividends and profits from the assessable profits of other persons 26A. Exclusion of certain profits from tax PART V ALLOWANCES 27. Allowances, general provisions 28. Basic allowance 29. Married person's allowance 30. Dependent parent allowance 31. Child allowance 32. Single parent allowance 33. Provisions supplementary to section 30 and 31 PART VI DEPRECIATION, ETC.

34. Initial and annual allowances, industrial buildings and structures 35. Balancing allowances and charges, industrial buildings and structures 35A. Special provisions on termination of leasehold interest 35B. Buildings and structures bought unused 36. Rebuilding allowance for a commercial building or structure 36A. Application of provisions to machinery or plant 37. Initial and annual allowances, machinery or plant 37A. Initial and annual allowances in respect of machinery and plant acquired under hire purchase agreement 38. Balancing allowances and charges, machinery or plant 38A. Determination of cost of individual assets sold together for one price 38B. Commissioner's power to determine the true value of an asset on sale 38C. Special provision as to allowances on a change in partnership 39. Replacement of machinery or plant 39A. Reduction of allowances not to affect calculation of subsequent allowances 39B. Initial and annual allowances on machinery or plant under the pooling system 39C. Pooling system when not to apply 39D. Balancing allowances and charges under the pooling system 39E. Allowances under this Part in respect of capital expenditure on leased machinery and plant 40. Interpretation 40A. Initial allowances in years of assessment 1974/75 to 1975/76 PART VII PERSONAL ASSESSMENT 40B. Interpretation 41. Election for personal assessment 42. Calculation of total income 42A. Assessment to tax 42B. (Repealed) 43. Rates of charge 43A. (Repealed) PART VIII DOUBLE TAXATION RELIEF 44. (Repealed) 45. Relief in respect of Commonwealth income tax 46. Official secrecy 47-48. (Repealed) 49. Double taxation arrangements 50. Tax credits PART IX RETURNS, ETC.

51. Returns and information to be furnished 51A. Power to require statement of assets and liabilities, etc.

51B. Power to issue search warrant 51C. Business records to be kept 51D. Rent records to be kept 52. Information to be furnished by officials and employers 53. Who may act for incapacitated or non-resident persons 54. Liability of executor of deceased taxpayer 55. (Repealed) 56. Precedent partner to act on behalf of partnership 56A. Joint owners and co-owners 57. Principal officer to act on behalf of a corporation or body of persons 58. Signature and service of notices 58A. (Repealed) PART X ASSESSMENTS 59. Assessor to make assessments 59A. Provisional assessments 60. Additional assessments 61. Certain transactions and dispositions to be disregarded 61A. Transactions designed to avoid liability for tax 61B. Utilization of losses to avoid tax 62. Notice to be issued by Commissioner 63. Validity of assessments, etc.

63A. Appointment of agent in the United Kingdom PART XA PROVISIONAL SALARIES TAX 63B. Liability for provisional salaries tax 63C. Amount of provisional salaries tax 63D. Demands for provisional salaries tax 63E. Holding over of payment of provisional salaries tax 63F. Provisional salaries tax to be applied against salaries tax PART XB PROVISIONAL PROFITS TAX 63G. Liability for provisional profits tax 63H. Amount of provisional profits tax 63I. Demands for provisional profits tax 63J. Holding over of payment of provisional profits tax 63K. Provisional profits tax to be applied against profits tax PART XC PROVISIONAL PROPERTY TAX 63L. Liability for provisional property tax 63M. Amount of provisional property tax 63N. Demands for provisional property tax 63O. Holding over of payment of provisional property tax 63P. Provisional property tax to be applied against property tax PART XI OBJECTIONS AND APPEALS 64. Objections 65. Constitution of the Board of Review 66. Right of appeal to the Board of Review 67. Transfer of appeals under section 66 for hearing and determination by High Court instead of Board of Review 68. Hearing and disposal of appeals to the Board of Review 69. Appeals to the High Court 69A. Right to appeal directly to Court of Appeal against decision of Board of Review 70. Assessments or amended assessments to be final 70A. Powers of assessor to correct errors 70B. Husband and wife PART XII PAYMENT AND RECOVERY OF TAX 71. Provisions regarding payment of tax 72. Tax to include fines, etc.

73-74. (Repealed) 75. Tax recoverable as a civil debt through the District Court 75A. (Repealed) 76. Recovery of tax from a debtor of the taxpayer 77. Recovery of tax from persons leaving Hong Kong 77A. Refusal of clearance to ships and aircraft where tax is in default 78. (Repealed) PART XIII REPAYMENT 79. Tax paid in excess to be refunded PART XIV PENALTIES AND OFFENCES 80. Penalties for failure to make returns, making incorrect returns, etc.

80A. (Repealed) 81. Breach of secrecy and other matters to be offences 82. Penal provisions relating to fraud, etc.

82A. Additional tax in certain cases 82B. Appeals against assessment to additional tax to Board of Review 83. Tax payable notwithstanding proceedings 84. Prosecutions, sanction of Commissioner PART XV GENERAL 85. Power to make rules 86. Board of Inland Revenue to specify forms 87. General power of Governor in Council to exempt 87A. Approval of retirement schemes 88. Exemption of charitable bodies 89. Transitional provisions Schedule 1 Standard Rate Schedule 2 Rates Schedule 3 Public Utility Companies Fourth Schedule Allowances Fifth Schedule Transitional Provisions relating to the Inland Revenue (Amendment) (No. 3) Ordinance 1989 Schedule 6 PART I Instruments PART II Bodies To impose a tax on property, earnings and profits.

(Amended 26 of 1969 s. 2; 17 of 1989 s. 2) [3 May 1947] PART I INTRODUCTORY 1. Short title This Ordinance may be cited as the Inland Revenue Ordinance.

2. Interpretation (1) In this Ordinance, unless the context otherwise requires- "active partner", in relation to a partnership, means a partner who takes an active part in the control, management, or conduct of the trade or business of such partnership; "agent", in relation to a non-resident person or to a partnership in which any partner is a non-resident person, includes- (a) the agent, attorney, factor, receiver, or manager in Hong Kong of such person or partnership; and (b) any person in Hong Kong through whom such person or partnership is in receipt of any profits or income arising in or derived from Hong Kong; "approved charitable donation" means a donation of money to any charitable institution or trust of a public character which is exempt from tax under section 88 or to the Government, the Urban Council or Regional Council, for charitable purposes; (Replaced 13 of 1971 s. 2. Amended 76 of 1975 s.

2; 74 of 1981 s. 4; 30 of 1990 s. 2) "approved retirement scheme" means a retirement scheme or part thereof approved for the time being by the Commissioner under section 87A; (Added 49 of 1956 s. 3. Amended 7 of 1986 s. 2) "assessable income" means the assessable income of a person in any year of assessment as ascertained in accordance with sections 11B, 11C and 11D; and "net assessable income" means assessable income as adjusted in accordance with section 12; (Replaced 71 of 1983 s. 2) "assessable profits" means the profits in respect of which a person is chargeable to tax for the basis period for any year of assessment, calculated in accordance with the provisions of Part IV; (Replaced 28 of 1964 s. 2) "assessor" means an assessor appointed under this Ordinance; "assistant commissioner" means an assistant commissioner of Inland Revenue appointed under this Ordinance; "authorized representative" means a person authorized in writing by any other person to act on his behalf for the purposes of this Ordinance; (Replaced 7 of 1975 s. 2) "basis period" for any year of assessment is the period on the income or the profits of which tax for that year ultimately falls to be computed; (Amended 36 of 1955 s. 3) "bill of sale" means a bill of sale registrable under the Bills of Sale Ordinance (Cap. 20); "body of person" means any body politic, corporate or collegiate and any company, fraternity, fellowship and society of persons whether corporate or not corporate; (Added 36 of 1955 s. 3) "business" includes agricultural undertaking, poultry and pig rearing and the letting or sub-letting by any corporation to any person of any premises or portion thereof, and the sub-letting by any other person of any premises or portion of any premises held by him under a lease or tenancy other than from the Crown; (Replaced 35 of 1965 s. 2) "certificate of deposit" means a document relating to money, in any currency, which has been deposited with the issuer or some other person, being a document which recognizes an obligation to pay a stated amount to bearer or to order, with or without interest, and being a document by the delivery of which, with or without endorsement, the right to receive that stated amount, with or without interest, is transferable; (Added 30 of 1981 s. 2) "Commissioner" means the Commissioner of Inland Revenue appointed under this Ordinance; (Replaced 26 of 1969 s. 3) "corporation" means any company which is either incorporated or registered under any enactment or charter in force in Hong Kong or elsewhere but does not include a co-operative society or a trade union; (Amended 2 of 1971 s.

2) "debenture" means a debenture as defined in section 2 (1) of the Companies Ordinance (Cap. 32); "deposit" means a deposit as defined in section 2 (1) of the Banking Ordinance (Cap. 155); (Added 29 of 1982 s. 2. Amended 27 of 1986 s. 137) "deputy commissioner" means the deputy commissioner of Inland Revenue appointed under this Ordinance; "executor" means any executor, administrator, or other person administering the estate of a deceased person, and includes a trustee acting under a trust created by the last will of the author of the trust; "financial institution", means- (a) an authorized institution licensed or registered under the Banking Ordinance (Cap. 155); (b) any associated corporation of such an authorized institution which, being exempt by virtue of section 3 (2) (a) or (b) or (c) of the Banking Ordinance (Cap. 155), would have been liable to be licensed or registered as a deposit-taking company or restricted licence bank under that Ordinance had it not been so exempt; (Replaced 27 of 1986 s. 137. Amended 3 of 1990 s. 55) "Governor" means the Governor of Hong Kong and includes the officer for the time being administering the Government; (Added 36 of 1955 s. 3) "Hong Kong currency" means money which is legal tender in Hong Kong; (Added 29 of 1982 s. 2) "husband" means a married man whose marriage is a marriage within the meaning of this section; (Added 43 of 1989 s. 2) "incapacitated person" means any minor, lunatic, idiot, or person of unsound mind; "inspector" means an inspector appointed under this Ordinance; (Added 36 of 1955 s. 3) "limited partnership" has the same meaning as in section 3 of the Limited Partnerships Ordinance (Cap. 37); (Added 47 of 1992 s. 2) "marriage" means- (a) any marriage recognized by the law of Hong Kong; or (b) any marriage, whether or not so recognized, entered into outside Hong Kong according to the law of the place where it was entered into and between persons having the capacity to do so, but shall not, in the case of a marriage which is both potentially and actually polygamous, include marriage between a man and any wife other than the principal wife, and "married" shall be construed accordingly; (Added 43 of 1989 s. 2) "mortgage" means a security by way of mortgage or equitable mortgage for the payment of any definite and certain sum of money advanced or lent at the time, or previously due and owing, or forborne to be paid, being payable, or for the repayment of money thereafter to be lent, advanced or paid, or which may become due upon an account current, together with any sum already advanced or due, or without, as the case may be, and includes- (a) conditional surrender by way of mortgage, or further charge, of or affecting any property whatsoever; and (b) any conveyance of any property whatsoever in trust to be sold or otherwise converted into money, intended only as a security, and redeemable before the sale or other disposal thereof, either by express stipulation or otherwise; and (c) any instrument for defeating or making redeemable, or explaining or qualifying any conveyance, transfer or disposition of any property whatsoever, apparently absolute, but intended only as a security; and (d) any instrument relating to the deposit of any title deeds or instruments constituting or being evidence of the title to any property whatsoever or creating a charge on any property whatsoever; and (e) any mortgage by an equitable owner of his equitable rights; and (f) any warrant of attorney to enter up judgment; (Replaced 79 of 1979 s.

2) [cf. 1891 c. 39 s. 86 U. K.] "net chargeable income" means net chargeable income calculated in accordance with section 12B; (Added 71 of 1983 s. 2) "owner" in respect of land or buildings or land and buildings, includes a person holding directly from the Crown, a beneficial owner, a tenant for life, a mortgagor, a mortgagee in possession, a person who is making payments to a co-operative society registered under the Co-operative societies Ordinance (Cap. 33) for the purpose of the purchase thereof, and a person who holds land or buildings or land and buildings subject to a ground rent or other annual charge; and includes an executor of the estate of an owner; (Added 26 of 1969 s. 3. Amended 8 of 1983 s. 2) "person" includes a corporation, partnership, trustee, whether incorporated or unincorporated, or body of persons; (Amended 2 of 1971 s.

2; 30 of 1981 s. 2) "precedent partner" means the partner who, of the active partners resident in Hong Kong- (a) is first named in the agreement of partnership; or (b) if there is no agreement, is specified by name or initials singly or with precedence to the other partners in the usual name of the partnership; or (c) is first named in any statutory statement of the names of the partners; "profits arising in or derived from Hong Kong" for the purposes of Part IV shall, without in any way limiting the meaning of the term, include all profits from business transacted in Hong Kong, whether directly or through an agent; "receiver" includes any receiver or liquidator, and any assignee, trustee, or other person having the possession or control of the property of any person by reason of insolvency or bankruptcy; "retirement scheme" means any scheme or arrangement, whether or not it is enforceable or intended to be enforceable by legal proceedings, under which, or any provident fund out of which, there is to be paid for the benefit of any person or of his widow, children, surviving dependants or legal representative, any pension, annuity, lump sum, gratuity or other like benefit to be paid- (a) on retirement, or in anticipation of retirement, or, in connection with previous employment, after retirement; or (b) on or in anticipation of or in connection with any change in the nature of the employment of any person, and includes any pension, annuity, lump sum, gratuity or other like benefit which is to be afforded by reason of the death or disability of a person occurring during his employment, where such pension, annuity, lump sum or gratuity is calculated by having regard to the period of such service; (Added 7 of 1986 s. 2) "river trade limits" has the same meaning as in the Merchant Shipping Ordinance (Cap. 281); (Added 47 of 1992 s. 2) "specified form" means a form specified under section 86; (Added 43 of 1989 s. 2) "spouse" means a husband or wife; (Added 43 of 1989 s. 2) "standard rate" means the rate specified in Schedule 1; (Added 30 of 1950 Schedule) "tax" except for the purposes of Parts XII and XIII, means any tax imposed by this Ordinance (including provisional salaries tax charged under Part XA, provisional profits tax charged under Part XB and provisional property tax charged under Part XC) other than additional tax, but for the purposes of Parts XII and XIII "tax" includes additional tax; (Replaced 26 of 1969 s. 3. Amended 8 of 1973 s. 2; 7 of 1975 s. 2; 8 of 1983 s. 2) "trade" includes every trade and manufacture, and every adventure and concern in the nature of trade; "trustee" includes any trustee, guardian, curator, manager, or other person having the direction, control, or management of any property on behalf of any person, but does not include an executor; "wife" means a married woman whose marriage is a marriage within the meaning of this section; (Replaced 43 of 1989 s. 2) "year of assessment" means the period of 12 months commencing on 1 April in any year; (Replaced 30 of 1950 Schedule) "year preceding a year of assessment" means the period of 12 months ending on 31 March immediately prior to such year of assessment.

(Amended 36 of 1955 s. 3; 9 of 1958 s. 2; 26 of 1969 s. 3; 7 of 1986 s.

12) (2) For the purposes of the definition of "financial institution" in subsection (1)- "associated corporation", in relation to a bank or deposit-taking company, means- (a) a corporation over which the bank or deposit-taking company has control; (b) a corporation which has control over the bank or deposit-taking company; or (c) a corporation which is under the control of the same person as is the bank or deposit-taking company; "control", in relation to a corporation, means the power of a person to secure- (a) by means of the holding of shares or the possession of voting power in or in relation to that or any other corporation; or (b) by virtue of any powers conferred by the articles of association or other document regulating that or any other corporation, that the affairs of the first-mentioned corporation are conducted in accordance with the wishes of that person.

(Added 73 of 1978 s. 2) (3) For the purposes of this Ordinance a husband and wife shall be deemed to be living apart when they are living apart- (a) under a decree or order of a competent court in or outside Hong Kong; (b) under a duly executed deed of separation or any instrument of similar effect; or (c) in such circumstances that the Commissioner is of the opinion the separation is likely to be permanent. (Added 43 of 1989 s. 2) 3. Establishment of Board of Inland Revenue, Power of Governor to appoint a Commissioner and other officers (1) (a) There shall be a Board of Inland Revenue composed of the Financial Secretary and 4 other members appointed by the Governor, of whom not more than one shall be an official in the employment of the Government. A member so appointed shall hold office until he shall resign or be removed from office by the Governor.

(aa) The Board of Inland Revenue shall have a secretary who shall be the deputy commissioner. (Added 8 of 1983 s. 3) (b) 3 members of the Board of Inland Revenue shall form a quorum for the transaction of business and when the Financial Secretary is present he shall be the chairman. (c) All matters coming before the Board of Inland Revenue shall be decided by a majority of votes, and in the case of an equality of votes the chairman or presiding member shall have a second or a casting vote.

(d) The Board of Inland Revenue may transact any of its business by the circulation of papers without meeting; and a resolution signed by a majority of the members shall be as valid and effective as if it had been passed at a meeting by the votes of the members so signing. (Added 8 of 1983 s. 3) (2) For the purposes of this Ordinance, the Governor may appoint a Commissioner, a deputy commissioner, assistant commissioners, assessors and inspectors. (Amended 36 of 1955 s. 4) (3) An assistant commissioner exercising or performing any power, duty, or function of the Commissioner under this Ordinance shall be deemed for all purposes to be authorized to exercise or perform the same until the contrary is proved.

(4) All powers conferred upon an assessor by this Ordinance may be exercised by an assistant commissioner.

3A. Exercise of powers and duties (1) Where under this Ordinance any power is conferred or any duty is imposed on the Commissioner and so long as it is not provided that the power or duty shall be exercised or performed by the Commissioner personally, such power may be exercised or such duty may be performed by the deputy commissioner or by an assistant commissioner.

(2) Except where a provision of this Ordinance provides that a power or duty shall be exercised or performed by the Commissioner personally, the Commissioner may, subject to such limitations as he may think fit, authorize in writing any public officer to exercise any power or perform any duty conferred or imposed upon him by this Ordinance.

(Added 26 of 1969 s. 4) 4. Official secrecy (1) Except in the performance of his duties under this Ordinance, every person who has been appointed under or who is or has been employed in carrying out or in assisting any persons to carry out the provisions of this Ordinance shall preserve and aid in preserving secrecy with regard to all matters relating to the affairs of any person that may come to his knowledge in the performance of his duties under this Ordinance, and shall not communicate any such matter to any person other than the person to whom such matter relates or his executor or the authorized representative of such person or such executor, nor suffer or permit any person to have access to any records in the possession, custody or control of the Commissioner. (Amended 9 of 1958 s. 3) (2) Every person appointed under or employed in carrying out the provisions of this Ordinance, shall before acting under this Ordinance take and subscribe before a justice of the peace an oath of secrecy in such form as the Board of Inland Revenue may specify.

(Amended 39 of 1969 s. 2) (3) No person appointed under or employed in carrying out the provisions of this Ordinance shall be required to produce in any court any return, document, or assessment, or to divulge or communicate to any court any matter or thing coming under his notice in the performance of his duties under this Ordinance, except as may be necessary for the purpose of carrying into effect the provisions of this Ordinance.

(4) Notwithstanding anything contained in this section, the Commissioner or any officer of the Inland Revenue Department authorized by the Commissioner in that behalf may communicate any matter which comes to his knowledge, including a copy of any return, accounts or other document submitted to him in connection with this Ordinance- (a) to the Commissioner of Rating and Valuation, to the Collector of Stamp Revenue, or to the Estate Duty Commissioner, or (Amended 20 of 1948 s. 4) (b) to the income tax authority of any part of the Commonwealth to such an extent as the Commissioner may deem necessary to enable the correct relief to be given from income tax in that part in respect of the payment of tax under this Ordinance, or (Amended 30 of 1950 Schedule; 9 of 1958 s. 3) (c) to the Attorney General, or any public officer authorized by him, for the purpose of reporting under section 68 (5) an appeal to the Board of Review, or (Added 2 of 1971 s. 3. Amended 79 of 1992 s. 10) (d) to any person appointed under or employed in carrying out the provisions of the Business Registration Ordinance (Cap. 310), as regards any matter required to be notified to the Commissioner pursuant to section 8 (1) or (2) of that Ordinance by the person submitting such return, accounts or other document. (Added 79 of 1992 s. 10) (5) Notwithstanding anything contained in this section, the Commissioner may permit the Director of Audit or any officer of that department duly authorized by the Director of Audit in that behalf to have such access to any records or documents as may be necessary for the performance of his official duties.

The Director of Audit or any officer so authorized shall be deemed to be a person employed in carrying out the provisions of this Ordinance for the purpose of subsection (2).

(6) Notwithstanding anything contained in this section, where the Commissioner is of the opinion that any tax deemed to be in default under the provisions of section 71 (1) has for the time being become irrecoverable, he may communicate to the Financial Secretary the names and descriptions of the persons charged with such tax together with particulars of the tax in default. (Added 9 of 1958 s. 3) (Amended 9 of 1958 s. 3) PART II PROPERTY TAX 5. Charge of property tax (1) Property tax shall, subject to the provisions of this Ordinance, be charged for each year of assessment on every person being the owner of any land or buildings or land and buildings wherever situate in Hong Kong and shall be computed at the standard rate on the net assessable value of such land or buildings or land and buildings for each such year. (Amended 76 of 1975 s. 3; 8 of 1983 s. 4; 7 of 1986 s. 12) Provided that- (a) (Repealed 76 of 1975 s. 3) (b) where the owner of the land is not the owner of the buildings thereon, separate assessments shall be made for the land and for the buildings; (c) (Repealed 26 of 1969 s. 5) (d) (Repealed 76 of 1975 s. 3) (e) property tax shall not be charged for any year of assessment in respect of any land or buildings or land and buildings in the New Territories other than New Kowloon unless and until the Governor by proclamation in the Gazette declares that property tax shall be so charged. (Added 49 of 1956 s. 4) (Replaced 36 of 1955 s. 6) (1A) In subsection (1), "net assessable value" means the assessable value of land or buildings or land and buildings, ascertained in accordance with section 5A or 5B, as the case may be- (a) less, in a case under section 5A, an allowance for repairs and outgoings of 20% of that assessable value; or (b) less, in a case under section 5B- (i) where the owner agrees to pay the rates in respect of the land or buildings or land and buildings, those rates paid by him; and (ii) an allowance for repairs and outgoings of 20% of that assessable value after deduction of any rates under subparagraph (i). (Added 76 of 1975 s. 3. Amended 8 of 1983 s. 4) (1B) The percentage allowance specified in subsection (1A) may be amended by resolution of the Legislative Council. (Added 76 of 1975 s. 3) (2) (a) Notwithstanding subsection (1), any corporation carrying on a trade, profession or business in Hong Kong shall, on application made in writing to the Commissioner and on proof of the facts to the satisfaction of the Commissioner, be entitled to exemption from the property tax for any year of assessment in respect of any land or buildings or land and buildings owned by the corporation where the corporation would be entitled under section 25 to a set-off of the property tax which, if exemption were not granted under this subsection, would be paid by the corporation; and the property shall be and remain exempted from property tax for each year of assessment in which the circumstances, throughout the whole of that year, are such as to qualify the property for such exemption for the whole of that year. (Amended 7 of 1986 s. 12) (b) Where the circumstances are such that the property does not qualify for exemption under this subsection for the whole of any year of assessment, then the property tax chargeable in respect thereof shall be reduced in the proportion which the number of days in such year during which the property was so qualified bears to the whole of that year, and any excess tax paid shall be refunded.

(c) Every corporation exempted from property tax under this subsection in respect of any land or buildings or land and buildings shall, within 30 days after the event, notify the Commissioner in writing of any change in the ownership or use thereof or in any other circumstances affecting such exemption. (Added 35 of 1965 s. 3) (2A) Except for the purposes of section 5B (5)- (a) the words "throughout the whole of that year" and "the whole of" in subsection (2) (a); (b) subsection (2) (b); and (c) subsection (3), (4) and (5), shall not apply to any year of assessment commencing on or after 1 April 1983. (Added 98 of 1983 s. 4) (3) Notwithstanding subsection (1)-(Amended 2 of 1971 s. 4; 5 of 1982 s. 2) (a) in the case of any building or any part thereof owned by a sole owner and occupied solely by him exclusively for residential purposes throughout the whole of any year of assessment, property tax shall not be charged in respect thereof for that year of assessment, and any tax paid shall be refunded; (b) in the case of any building or any part thereof owned by a sole owner and occupied solely by him exclusively for residential purposes during, but not throughout the whole of, any year of assessment, property tax in respect thereof for that year of assessment shall be reduced in the proportion in which the number of days during which it was occupied solely by the owner exclusively for residential purposes during that year bears to the number of days in that year, and any excess tax paid shall be refunded; (c) in the case of any building or part thereof owned by more than one owner jointly or in common, the property tax which would, but for the provisions of this paragraph, be chargeable in respect thereof shall, for the purposes of determining what, if any, reduction in the amount of such tax is allowable under this paragraph, and for this purpose only, be treated as if apportioned- (i) in the case of joint ownership, between the joint owners equally; and (ii) in the case of ownership in common, between the owners in common each in proportion to his share in such ownership, and in respect of any such owner who throughout the whole of any year of assessment solely occupied such building or part exclusively for residential purposes, his portion of the property tax for that year of assessment shall not be charged in respect of such building or part, and in respect of any such owner who, during but not throughout the whole of, any year of assessment, solely occupied such building or part exclusively for residential purposes, his portion of the property tax for that year of assessment shall be reduced in the proportion in which the number of days during which such building or part was solely occupied by him exclusively for residential purposes during that year bears to the number of days in that year, and the total property tax in respect of such building or part shall be computed accordingly, and any excess tax paid shall be refunded; (Added 35 of 1965 s. 3) (d) in the case of any land or building or land and building or part thereof owned by- (i) a person who carries on a club or similar institution on or in such land or building or land and building or such part, being a person who is, by virtue of section 24(1), deemed not to carry on a business; (ii) a person who carries on a trade, professional or business association on or in such land or building or land and building or part in such circumstances that he is not deemed by section 24 (2) to carry on a business; (iii) a clan, family or t'ong, which land or building or land and building or part is certified by the Secretary for Home Affairs to be the ancestral property of the clan or family or the property of the t'ong, (Amended L.

N. 17 of 1982; L. N. 18 of 1983; L. N. 262 of 1989) and occupied by such person, clan, family and t'ong solely for the purposes of a club or similar institution or a trade, professional or business association or for the purposes of the clan, family or t'ong, as the case may be, throughout the whole of any year of assessment, property tax shall not be charged in respect thereof for that year of assessment, and any tax paid shall be refunded; Provided that where, during a year of assessment, such person, clan, family or t'ong received any rent or other similar consideration, other than from a member of the club or similar institution or of the trade, professional or business association or of the clan, family or t'ong, under a lease or licence or an agreement for a lease or licence of such land or building or land and building or part thereof, property tax shall be charged for that year in accordance with subsection (1) by reference to- (i) the proportion which the area the subject of the lease or licence or agreement therefor bears to the total area of the whole of the land or building or land and building or part; and (ii) the proportion which the number of days during which such land or building or land and building or part was subject to such lease or licence or agreement therefor during that year bears to the number of days in that year. (Added 7 of 1979 s. 2) (4) Where any building or part of any building in respect of which the property tax has not been charged or has been reduced in pursuance of any of the provisions of subsection (3) ceases to be occupied solely by the owner exclusively for residential purposes or, in the case referred to in paragraph (c) of that subsection, solely by any of the owners by reason of whose occupation the property tax was not charged or was reduced, such owner shall notify the Commissioner in writing within 3 months of his ceasing so to occupy the same. (Added 35 of 1965 s. 3) (5) For the purposes of subsections (2), (3) and (4)- (a) (Repealed 26 of 1969 s. 5) (b) occupation of any building or part by one of more than one owners shall not be taken to be occupation otherwise than solely by such owner merely by reason of the fact that another owner also occupied the same building or part during the same period; (c) references to a building or part thereof means only a building or a part of a building the rateable value of which is separately estimated under section 10 of the Rating Ordinance (Cap. 116). (Added 35 of 1965 s. 3) 5A. Ascertainment of assessable value (1) Except for the purposes of section 5B (5) and an assessment of provisional property tax under Part XC for the year of assessment commencing on 1 April 1983, this section shall not apply to any year of assessment commencing on or after 1 April 1983. (Added 8 of 1983 s. 5) (1A) In a case where subsection (4) applies, the assessable value of land or buildings or land and buildings shall be an amount equal to the estimated annual rent which would be permitted under Part I or authorized or fixed under Part II or IV or section 124C, as the case may be, of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) if- (Amended 39 of 1979 s. 26; 76 of 1981 s. 60) (a) the tenant undertook to pay all usual tenant's rates and taxes; and (b) the landlord undertook to pay the Crown rent, the costs of repairs and insurance and any other expenses necessary to maintain the property in a state to command that rent.

(2) In any other case, the assessable value of land or buildings or land and buildings shall be an amount equal to the rent at which on the first day of any year of assessment such property might reasonably be expected to let from year to year if- (a) the tenant undertook to pay all usual tenant's rates and taxes; and (b) the landlord undertook to pay the Crown rent, the costs of repairs and insurance and any other expenses necessary to maintain the property in a state to command that rent: Provided that- (i) in respect of any property which became chargeable to property tax on a date after the first day of the year of assessment for which an assessable value falls to be ascertained, the assessable value of such property shall be ascertained by reference to that date; (ii) where in relation to any year of assessment a fresh assessable value of any property has not been ascertained, the assessable value of the property for that year shall be deemed to be the same as that last ascertained in respect of such property. (3) For the purpose of ascertaining the assessable value of land or buildings or land and buildings under this section- (a) subject to paragraph (b), all machinery (including lifts) used as adjuncts to the property shall be regarded as part of the property, but the reasonable expenses incurred in working such machinery shall be allowed for in arriving at the assessable value of the property; (b) no account shall be taken of the value of any machinery in or on the property for the purpose of manufacturing operations or trade processes.

(3A) Subject to subsection (3B), where any land or buildings or land and buildings are wholly let on the first day of any year of assessment and the Commissioner is satisfied that the assessable value of the land or buildings or land and buildings as ascertained in accordance with this section exceeds the annual rent in respect of the land or buildings or land and buildings, the assessable value for that year of assessment shall, if paragraphs (a) and (b) of subsection (1A) or (2) apply, be reduced to the annual rent. (Added 5 of 1982 s. 3) (3B) For the purposes of subsection (3A), the annual rent shall be- (a) if the rent reserved as on the first day of the year of assessment is expressed as an annual rent, such annual rent; or (b) in any other case, the amount of the rent reserved as on the first day of the year of assessment expressed as the annual rent, and shall include any consideration which has been given or required or will be given or required, whether in money or in kind or in any other manner, as a condition of the grant or continuation of the letting: Provided that in respect of any letting the Commissioner may apportion such consideration or any part thereof on such basis as in his opinion is reasonable and appropriate in the circumstances of the case. (Added 5 of 1982 s. 3) (4) This subsection applies where- (a) any building or any part thereof is wholly let on the first day of any year of assessment; (b) Part I, II or IV or section 124A of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) applies on the first day of any year of assessment to that letting; and (Amended 39 of 1979 s. 26; 76 of 1981 s.

60) (c) the Commissioner is satisfied that no consideration has been given or required or will be given or required, whether in money or in kind or in any other manner, as a condition of the grant or continuation of such letting other than the payment of such rent as is permitted or authorized under the Landlord and Tenant (Consolidation) Ordinance (Cap. 7).

(Replaced 76 of 1975 s. 4) 5B. Ascertainment of assessable value on or after 1 April 1983 (1) Subject to subsection (5), this section shall apply to any year of assessment commencing on or after 1 April 1983.

(2) The assessable value of land or buildings or land and buildings for each year of assessment shall be the consideration, in money or money's worth, payable in that year to, to the order of, or for the benefit of, the owner in respect of the right of use of that land or buildings or land and buildings.

(3) Any consideration payable before the year of assessment commencing on 1 April 1983 in respect of a period of the right of use which starts after, or extends beyond, 1 April 1983 shall, for the purposes of this section, be deemed to be payable in equal monthly instalments during the period of the right of use or during a period of 3 years ending on 31 March 1986, whichever is the shorter.

(4) Any consideration payable in respect of a period of the right of use which is not contained within any one year of assessment shall, for the purposes of this section, be deemed to be payable in equal monthly instalments during the period of the right of use or during a period of 3 years commencing at the start of the period of the right of use to which the consideration relates, whichever is the shorter.

(5) When a person ceases to be liable to property tax in respect of land or buildings or land and buildings during the year of assessment commencing on 1 April 1983, the assessable value of that land or buildings or land and buildings shall be ascertained in accordance with section 5A.

(6) In this section, "consideration" includes any consideration payable in respect of the provision of any services or benefits connected with or related to the right of use. (Added 8 of 1983 s. 6) 6. (Repealed 8 of 1983 s. 7) 7. Reduction and refund in case of unoccupied property (1) Except for the purposes of section 5B (5), this section shall not apply to any year of assessment commencing on or after 1 April 1983.

(Added 8 of 1983 s. 8) (2) Where it is proved to the satisfaction of the Commissioner that any land or buildings or land and buildings have been occupied for less than 12 months in any year of assessment any property tax payable in respect thereof shall be reduced proportionately and any excess tax paid shall be refunded. (Replaced 36 of 1955 s. 8. Amended 8 of 1973 s. 3; 16 of 1974 s. 3; 76 of 1975 s. 5) 7A. Interpretation In this Part- "buildings", except for the purposes of section 5(2), (3), (4) and (5), includes any part of a building; (Replaced 35 of 1965 s. 4) "land or buildings or land and buildings" includes piers, wharves and other structures; "occupied", in relation to land or buildings or land and buildings, means land or buildings or land and buildings which are being put to beneficial use. (Replaced 76 of 1975 s. 6) (Added 36 of 1955 s. 9) 7B. Claims for refund of property tax (1) Notwithstanding section 70, a claim made for a refund of property tax under section 5(3) (a), (b), (c) or (d) or under section 7 may be made in writing within 90 days after the end of the relevant year of assessment or within 90 days after notice of assessment to the property tax is given, whichever is the later: (Amended 7 of 1979 s. 3) Provided that if the Commissioner is satisfied that owing to absence from Hong Kong, sickness or other reasonable cause, the person claiming a refund of property tax was prevented from making his claim within the period allowed, the Commissioner shall extend the period as he considers reasonable in the circumstances. (Amended 7 of 1986 s. 12) (2) For the purposes of Part XI a claim made in accordance with subsection (1) shall be regarded as an objection to an assessment under section 64.

(Added 26 of 1969 s. 8) 7C. Bad debts (1) In ascertaining the assessable value of any land or buildings or land and buildings under this Part for any year of assessment commencing on or after 1 April 1983, there shall be deducted any consideration in money or money's worth, payable or deemed to be payable on or after 1 April 1983 to, to the order of, or for the benefit of, the owner in respect of the right of use of that land or buildings or that land and buildings and proved to the satisfaction of the assessor to have become irrecoverable during that year of assessment.

(2) Consideration previously deducted as irrecoverable and recovered during any year of assessment shall be treated as consideration mentioned in section 5B (2) payable in that year of assessment in respect of the right of use of the land or buildings or land and buildings in respect of which that consideration was payable.

(3) Notwithstanding section 70, where a person is entitled to deduct any consideration under subsection (1) but the land or buildings or land and buildings has no or insufficient assessable value from which to deduct that consideration in the year of assessment in which, under that subsection, that consideration is deductible, that consideration, or that consideration to the extent to which it cannot be deducted in that year, shall be deducted from the assessable value of that land or buildings or that land and buildings in the latest year of assessment in which that assessable value is sufficient.

(Added 8 of 1983 s. 9) PART III SALARIES TAX (Amended 36 of 1955 s. 10) 8. Charge of salaries tax (1) Salaries tax shall, subject to the provisions of this Ordinance, be charged for each year of assessment on every person in respect of his income arising in or derived from Hong Kong from the following sources- (a) any office or employment of profit; and (b) any pension.

(1A) For the purposes of this Part, income arising in or derived from Hong Kong from any employment- (a) includes, without in any way limiting the meaning of the expression and subject to paragraph (b), all income derived from services rendered in Hong Kong including leave pay attributable to such services; (Amended 69 of 1987 s. 2) (b) excludes income derived from services rendered by a person who- (i) is not employed by the Government or as master or member of the crew of a ship or as commander or member of the crew of an aircraft; and (ii) renders outside Hong Kong all the services in connection with his employment; and (Added 2 of 1971 s. 5. Amended 69 of 1987 s. 2) (c) excludes income derived by a person from services rendered by him in any territory outside Hong Kong where- (i) by the laws of the territory where the services are rendered, the income is chargeable to tax of substantially the same nature as salaries tax under this Ordinance; and (ii) the Commissioner is satisfied that that person has, by deduction or otherwise, paid tax of that nature in that territory in respect of the income. (Added 69 of 1987 s. 2) (1B) In determining whether or not all services are rendered outside Hong Kong for the purposes of subsection (1A) no account shall be taken of services rendered in Hong Kong during visits not exceeding a total of 60 days in the basis period for the year of assessment. (Added 2 of 1971 s. 5) (2) In computing the income of any person for the purposes of subsection (1) there shall be excluded the following- (a) the official emoluments received by the Governor; (b) the official emoluments of consuls, vice-consuls and persons employed on the staff of any consulate, who are subjects or citizens of the state which they represent; (c) any sum received by way of commutation of pension under an approved retirement scheme, the Pensions Ordinance (Cap.

89), the Pension Benefits Ordinance (Cap. 99) or the Pension Benefits (Judicial Officers) Ordinance (Cap. 401); (Replaced 2 of 1971 s. 5.

Amended 36 of 1987 s. 42; 85 of 1988 s. 48) (ca) in the case of a pension attributable to services rendered in any office or employment, other than employment by the Government, so much of the pension as is not attributable to services rendered in Hong Kong; (Added 2 of 1971 s. 5) (cb) any sum, other than a pension, withdrawn from an approved retirement scheme, but, if the approved retirement scheme is set up by an employer not chargeable to tax under Part IV, the sum excluded by this paragraph shall not exceed, in the case of that part of the sum withdrawn which represents the employer's contributions, an amount equal to 15% of the employee's income from his office or employment for the year preceding the date of withdrawal multiplied by the number of completed years of his service with that employer; (Added 2 of 1971 s. 5) (d) the emoluments payable by the Government of the members of the Commonwealth, other than the Government of Hong Kong, to members of Her Majesty's forces and to persons in the permanent service of those Governments in Hong Kong in respect of their officer under those Governments; (e) wound and disability pensions granted to members of Her Majesty's forces; (f) gratuities granted to members of Her Majesty's forces in respect of services rendered during war; (fa) the Hong Kong War Memorial Pensions and additional benefits paid under the Hong Kong War Memorial Pensions Ordinance (Cap. 386); (Added 51 of 1991 s. 24) (g) any amount arising from a scholarship, exhibition, bursary, or other similar educational endowment held by that person where he is receiving full time instruction at a university, college, school, or other similar educational establishment; (Replaced 26 of 1969 s. 9.

Amended 1 of 1991 s. 2) (h) the emoluments payable by the Government of the United Kingdom to persons in the temporary service of that Government who are in the opinion of the Commissioner serving in Hong Kong on United Kingdom based terms whereby they are normally employed in the United Kingdom but are liable for overseas service or are recruited in the United Kingdom specially for service in Hong Kong; (Added 26 of 1969 s. 9) (i) any amount received by way of periodical payments in the nature of alimony or maintenance by a person from his or her spouse or former spouse; (Added 35 of 1965 s. 5. Amended 19 of 1991 s. 2) (j) income derived from services rendered as master or member of the crew of a ship or as commander or member of the crew of an aircraft by a person who was present in Hong Kong on not more than- (i) a total of 60 days in the basis period for that year of assessment; and (ii) a total of 120 days falling partly within each of the basis periods for 2 consecutive years of assessment, one of which is that year of assessment; (Added 2 of 1971 s. 5. Amended 7 of 1986 s. 3) (k) any salary or other remuneration paid by another person who is chargeable to profits tax under Part IV which, but for section 17 (2), would be deductible in computing the profits or losses of such other person for the purposes of that Part. (Added 7 of 1986 s. 3) (Replaced 36 of 1955 s. 11. Amended 15 of 1966 s. 2; 7 of 1986 s. 12) 9. Definition of income from employment (1) Income from any office or employment includes- (a) any wages, salary, leave pay, fee, commission, bonus, gratuity, perquisite, or allowance, whether derived from the employer or others, except- (i) the value of any holiday warrant or passage granted by an employer to an employee in so far as it is used for travel; (ii) any allowance for the purchase of any such holiday warrant or passage in so far as it is expended for that purpose; (iii) any allowance paid by an employer to an employee for the transportation of the personal effects of the employee in connection with any journey on which a holiday warrant or passage referred to in subparagraph (i) or (ii) is used in so far as the allowance is expended for the transportation of the personal effects of the employee; and (Amended 3 of 1949 s. 4; 9 of 1950 Schedule; 2 of 1971 s. 6; 40 of 1972 s.

2; 1 of 1991 s. 3) (iv) subject to subsection (2A), any amount paid by the employer to or for the credit of a person other than the employee in discharge of a sole and primary liability of the employer to that other person, not being a liability for which any person was surety; (Added 1 of 1991 s. 3) (aa) so much of any amount (other than a pension falling under section 8 (1) (b)) received by an employee before or after his employment ceases, whether by way of commutation or otherwise, from a pension or provident fund, scheme or society, other than an approved retirement scheme, as represents his employer's contributions to that fund, scheme or society; (Added 2 of 1971 s. 6) (b) the rental value of any place of residence provided rent-free by the employer or an associated corporation; (Amended 38 of 1975 s. 2) (c) where a place of residence is provided by an employer or an associated corporation at a rent less than the rental value, the excess of the rental value over such rent; (Amended 38 of 1975 s. 2) (d) any gain realized by the exercise of, or by the assignment or release of, a right to acquire shares or stock in a corporation obtained by a person as the holder of an office in or an employee of that or any other corporation. (Added 2 of 1971 s. 6) (1A) (a) Notwithstanding subsection (1) (a), where an employer or an associated corporation- (i) pays all or part of the rent payable by the employee; or (ii) refunds all or part of the rent paid by the employee, such payment or refund shall be deemed not to be income; (Replaced 1 of 1991 s. 3) (b) a place of residence in respect of which an employer or associated corporation has paid or refunded all the rent therefor shall be deemed for the purposes of subsection (1) to be provided rent free by the employer or associated corporation; (Amended 1 of 1991 s. 3) (c) a place of residence in respect of which an employer or associated corporation has paid or refunded part of the rent therefor shall be deemed for the purposes of subsection (1) to be provided by the employer or associated corporation for a rent equal to the difference between the rent payable or paid by the employee and the part thereof paid or refunded by the employer or associated corporation. (Added 36 of 1954 s. 2. Amended 38 of 1975 s. 2; 1 of 1991 s. 3) (2) The rental value of any place of residence provided by the employer or an associated corporation shall be deemed to be 10% of the income as described in subsection (1) (a) derived from the employer for the period during which a place of residence is provided after deducting the outgoings, expenses and allowances provided for in section 12 (1) (a) and (b) to the extent to which they are incurred during the period for which the place of residence is provided and any lump sum payment or gratuity paid or granted upon the retirement or termination of employment of the employee: (Amended 35 of 1965 s. 6; 26 of 1969 s. 10; 7 of 1975 s. 3; 38 of 1975 s. 2) Provided that- (a) if such place of residence be a hotel, hostel or boarding house the rental value shall be deemed to be 8% of the income aforesaid where the accommodation consists of not more than 2 rooms and 4% where the accommodation consists of not more than one room; (b) if such place of residence be other than a hotel, hostel or boarding house any person may elect to have- (i) in respect of the years of assessment up to and including the year of assessment commencing on 1 April 1982, the assessable value ascertained in accordance with section 5A; or (ii) in respect of the years of assessment commencing on or after 1 April 1983, the rateable value included in the valuation list prepared under section 12 of the Rating Ordinance (Cap. 116) or, if the place of residence is not so included, the rateable value ascertained in accordance with Part III of that Ordinance, substituted for rental value at 10% as aforesaid. (Replaced 10 of 1950 s. 3. Amended 38 of 1975 s. 2; 76 of 1975 s. 7; 8 of 1983 s. 10) (2A) Subsection (1) (a) (iv) shall not operate to exclude- (a) any benefit capable of being converted into money by the recipient; or (b) any amount paid by an employer in connection with the education of a child of an employee, from income from any office or employment. (Added 1 of 1991 s. 3) (3) A pension shall include a pension which is voluntary or is capable of being discontinued. (Replaced 36 of 1955 s. 13) (4) For the purposes of subsection (1)- (a) the gain realized by the exercise at any time of such a right as is referred to in paragraph (d) of that subsection shall be taken to be the difference between the amount which a person might reasonably expect to obtain from a sale in the open market at that time of the shares or stock acquired and the amount or value of the consideration given whether for them of for the grant of the right of for both; and (b) the gain realized by the assignment or release of such a right as is referred to in paragraph (d) of that subsection shall be taken to be the difference between the amount or value of the consideration for the assignment or release and the amount or value of the consideration given for the grant of the right, (c) just apportionment being made of any entire consideration given for the grant of the right to acquire the said shares or stock and other shares or stock or otherwise for the grant of the right to acquire those shares or stock and for something beside): provided that neither the consideration given for the grant of the right nor any such entire consideration shall be taken to include the performance of any duties in or in connection with the office or employment by reason of which the right was granted, and no part of the amount or value of the consideration given for the grant shall be deducted more than once under this subsection. (Replaced 2 of 1971 s. 6) (5) Where salaries tax may by virtue of subsection (1) (d) become chargeable in respect of any gain which may be realized by the exercise of a right, salaries tax shall not be chargeable under any other provision of this Ordinance in respect of the receipt of the right. (Added 2 of 1971 s. 6. Amended L. N. 65 of 1986) (6) For the purposes of this section- "associated corporation" means- (a) a corporation over which the employer has control; (b) if the employer is a corporation- (i) a corporation which has control over the employer; or (ii) a corporation which is under the control of the same person as is the employer; "child of an employee" means any child of an employee or of his or her spouse or former spouse, whether or not born in wedlock, and includes the adopted or step child of either or both of them; (Added 1 of 1991 s. 3) "control", in relation to a corporation, means the power of a person to secure- (a) by means of the holding of shares or the possession of voting power in or in relation to that or any other corporation; or (b) by virtue of any powers conferred by the articles of association or other document regulating that or any other corporation, that the affairs of the first-mentioned corporation are conducted in accordance with the wishes of that person; (Added 38 of 1975 s. 2) "employee" includes a holder of an office; (Added 1 of 1991 s. 3) "place of residence" includes a residence provided by an employer or an associated corporation notwithstanding that the employee is required to occupy that place of residence by or under his terms of employment and whether or not by doing so he can better perform his duties. (Added 48 of 1979 s. 2) 10. Salaries tax on spouses to be paid separately unless they elect to be jointly assessed (1) In the case of a husband and wife, unless an election is made under subsection (2), salaries tax shall be payable on the net chargeable income of each spouse ascertained under this Part by the spouse to whom the income has accrued.

(2) Where in any year of assessment a husband and wife, not being a wife living apart from her husband, both have assessable income and- (a) either the husband or wife is entitled to allowances under Part V which are in excess of his or her net assessable income as reduced by approved charitable donations under section 12B (1) (a); or (b) both also have a net chargeable income and the aggregate of the salaries tax which would be payable by them if subsection (1) applies exceeds the salaries tax which would be payable if an election is made under this subsection, an election may be made by them, subject to section 11, to be assessed to salaries tax in the manner specified in subsection (3).

(3) Where an election is made by a husband and wife under subsection (2) salaries tax shall be payable on their aggregated net chargeable income as ascertained under section 12B (2) and in the case of an election- (a) under subsection (2) (a), the spouse who would have been chargeable to salaries tax in the absence of such an election; (b) under subsection (2) (b), the spouse who is nominated by them, shall be chargeable to salaries tax in respect of such aggregated net chargeable income. (4) Where a husband or wife is deceased an executor shall have the same right to make an election under subsection (2) as the deceased would have had if the deceased had not died.

(5) For the purposes of subsection (3), where an election is made under subsection (2) by a husband and wife who married one another in the year of assessment to which the election relates, they shall be deemed, for the purposes of ascertaining their aggregated net chargeable income for that year, to have married at the commencement of that year.

(Replaced 43 of 1989 s. 3) 11. The time and manner in which an election or the withdrawal of an election for joint assessment is to be made (1) An election shall be made in the specified form jointly by the husband and wife and, subject to subsection (3), may be withdrawn by them jointly by notice in writing given to the Commissioner.

(2) An election shall relate to the year of assessment specified in such form and it, and any withdrawal thereof under this section, may be made at any time- (a) within that year of assessment or the following year of assessment; or (b) before the expiration of a period of one month following the time when the assessment for the year of assessment becomes final and conclusive under section 70, whichever is the later, or within such further time, if any, as the Commissioner may allow as being reasonable in the circumstances.

(3) Where an election is withdrawn under this section it shall, for the purpose of assessing the net chargeable income of the husband and wife, be deemed never to have been made and any assessment made prior to such withdrawal on the basis of the election may be adjusted by the Commissioner to take account of the withdrawal. (4) A husband and wife who under this section have withdrawn an election may not again make an election in relation to the year of assessment to which the withdrawn election relates.

(5) In this section "election" means an election made under section 10 (2) and, where a nomination under section 10 (3) (b) is required, includes such nomination. (Added 43 of 1989 s. 3) 11A. (Repealed 71 of 1983 s. 4) 11B. Ascertainment of assessable income The assessable income of a person in any year of assessment shall be the aggregate amount of income accruing to him from all sources in that year of assessment. (Added 8 of 1973 s. 5. Amended 71 of 1983 s. 5) 11C. Office or employment of profit For the purpose of section 11B, a person shall be deemed to commence or cease, as the case may be, to derive income from a source whenever and as often as he commences or ceases- (a) to hold any office or employment of profit; or (b) to become entitled to a pension.

(Replaced 71 of 1983 s. 6) 11D. Receipt of income For the purpose of section 11B- (a) income which has accrued to a person during the basis period for a year of assessment but which has not been received by him in such basis period shall not be included in his assessable income for that year of assessment until such time as he shall have received such income, when notwithstanding anything contained in this Ordinance, an additional assessment shall be raised in respect of such income: Provided that for the purposes of this paragraph income which has either been made available to the person to whom it has accrued or has been dealt with on his behalf or according to his directions shall be deemed to have been received by such person; (b) income accrues to a person when he becomes entitled to claim payment thereof; Provided that- (i) any lump sum payment received on or after 1 April 1966, being a lump sum payment or gratuity paid or granted upon the retirement from or termination of any office or employment or any contract of employment of an employee or a lump sum payment of deferred pay or arrears of pay arising from an award of salary or wages, whether such a payment is paid by an employer to a person during employment or after that person has left his employ, shall upon the application in writing of the person entitled to claim payment thereof within 2 years after the end of the year of assessment in which the payment is made be related back and shall then be deemed to be income which has accrued during the periods in which the services or employment, in respect of which the payment was made, were performed or exercised, or, if the relevant periods of service or employment exceed 3 years, the payment shall be deemed to be income accruing at a constant rate over the 3 years ending on the date on which the person became entitled to claim payment thereof or ending on the last day of employment, whichever is the earlier; and, notwithstanding section 70, an application made by any person under this proviso for the adjustment of an assessment shall, to that extent, be regarded as a valid objection to the assessment under section 64; and (ii) subject to proviso (i), any payment made by an employer to a person after that person has ceased or been deemed to cease to derive income which, if it had been made on the last day of the period during which he derived income, would have been included in that person's assessable income for the year of assessment in which he ceased or is deemed to cease to derive income from that employment, shall be deemed to have accrued to that person on the last day of that employment.

(Added 8 of 1973 s. 5. Amended 71 of 1983 s. 7) 12. Adjustments to assessable income (1) In ascertaining the net assessable income of a person for any year of assessment, there shall be deducted from the assessable income of that person- (a) all outgoings and expenses, other than expenses of a domestic or private nature and capital expenditure, wholly, exclusively and necessarily incurred in the production of the assessable income; (b) allowances calculated in accordance with Part VI in respect of capital expenditure on machinery or plant the use of which is essential to the production of the assessable income; (c) the amount of any excess carried forward to that year of assessment in accordance with section 12A (3); (d) the amount of any excess required by subsection (3) to be deducted.

(2) Where any machinery or plant is not used wholly and exclusively in the production of assessable income, the amount of the allowances provided for in subsection (1) (b) shall be reduced in the proportion considered by the assessor to be fair and reasonable. (3) If in the case of a husband and wife who have made an election under section 10 (2), the aggregate of deductions claimed for any year of assessment by either spouse under subsection (1) (a), (b) and (c) exceeds the assessable income of that spouse in that year, the excess shall be deducted spouse in that year, the excess shall be deducted from the assessable income of the other spouse for the purpose of determining the net assessable income of that other spouse in that year. (Amended 43 of 1989 s. 4) (4) (Repealed 71 of 1983 s. 8) (5) The amount of assessable income for any year of assessment of a person shall, for the purposes of ascertaining his net assessable income, be increased by the amount of any balancing charge directed to be made under Part VI on that person in respect of the machinery or plant used in the production of the assessable income. (Replaced 7 of 1975 s. 4. Amended 71 of 1983 s. 8) 12A. Treatment of losses (1) Where in any year of assessment the aggregate of the outgoings, expenses and allowances deductible under section 12 (1) (a) and (b) from the assessable income of a person exceeds the amount of his assessable income, the amount of the excess shall, subject to subsection (4), be carried forward and set off against his assessable income in subsequent years of assessment.

(2) The aggregate amount set off against a person's assessable income in subsequent years of assessment shall not exceed the amount of any excess under subsection (1). (3) Subject to subsection (4), a set off by a person under this section shall first be made against his assessable income for the year of assessment next succeeding the year of assessment in respect of which the excess occurred and, so far as it cannot be so made, against his assessable income for the next year of assessment and so on until the excess has been completely set off.

(4) Where in any year of assessment the net chargeable incomes of the husband and wife are aggregated by reason of an election made under section 10 (2), any excess carried forward into that year under this section shall- (a) be set off primarily against the assessable income of the spouse whose deductions resulted in the excess and then, so far as it cannot be so set off, against the assessable income of the other spouse; and (b) then, and so far as it cannot be set off in accordance with paragraph (a)- (i) where no election is made under section 10 (2) in respect of the following year of assessment, in accordance with subsection (3); or (ii) where an election is made under section 10 (2) in respect of the following year of assessment, in accordance with paragraph (a), and so on from year to year until the excess has been completely set off.

(Replaced 43 of 1989 s. 5) (Replaced 7 of 1975 s. 4. Amended 71 of 1983 s. 9) 12B. Ascertainment of net chargeable income (1) The net chargeable income of a person for any year of assessment shall, subject to subsection (2), be such amount as is arrived at after deducting from his net assessable income- (a) such approved charitable donations as are provided for under section 12BA; and (b) such allowances as are under Part V permitted for that person. (Amended 43 of 1989 s. 6) (2) In the case of a person chargeable to salaries tax under section 10(3), that person and his or her spouse shall have but one net chargeable income, and it shall be the amount arrived at after deducting from the aggregate of their net assessable incomes- (a) such approved charitable donations as are provided for under section 12BA; and (b) such allowances as are under Part V permitted in their case. (Replaced 43 of 1989 s. 6) (3) (Repealed 43 of 1989 s. 6) (Replaced 71 of 1983 s. 10) 12BA. Charitable donation (1) Subject to subsections (2) and (3), the amount of charitable donations that, in ascertaining net chargeable income, may be deducted- (a) in the case of a person whose assessable income is aggregated with that of his or her spouse by reason of an election made under section 10 (2), from the aggregate of their net assessable incomes; and (b) in the case of any other person, from the net assessable income of that person.

shall be the aggregate of approved charitable donations which are made during that year by that person and by his or her spouse, if in any case such aggregate amount is not less than $ 100. (Replaced 43 of 1989 s. 7) (2) Every deduction claimed by virtue of subsection (1) shall be claimed on the specified form and the deduction shall be permitted only if the claim contains such particulars and is supported by such proof as the Commissioner may require. (Amended 43 of 1989 s. 7) (3) No deduction shall be permitted under subsection (1) for any year of assessment in respect of- (a) any sum which is allowable as a deduction under section 16, 16B, 16C or 16D; (b) a sum in excess of 10% of- (i) the assessable income as reduced by the deductions provided for under section 12 (1) (a) and (b); or (ii) in the case of a husband and wife who have made an election under section 10 (2), the aggregate of the assessable incomes of both spouses as reduced in each case by the deductions provided for under section 12 (1) (a) and (b). (Replaced 43 of 1989 s. 7) (4) Notwithstanding anything contained in this section, a charitable donation shall not be taken into account in ascertaining the net chargeable income of more than one person and, where a deduction of the same donation is claimed or allowed in respect of the net chargeable income of more than one person, section 33(2) to (4) shall apply with the necessary modifications to such a deduction as they do to a dependent parent allowance or a child allowance; and section 33 shall, where this subsection applies, be construed as if a reference to such an allowance included, in the case of a donation so claimed, a reference to an allowance to which section 33 (2) applies and, in the case of a donation so allowed, an allowance to which section 33 (3) applies. (Added 43 of 1989 s. 7) (Added 71 of 1983 s. 11) 13. Calculation of salaries tax (1) Subject to subsection (2), salaries tax, shall be charged at the rates specified in Schedule 2 on the net chargeable income of a person for each year of assessment ascertained in accordance with this Part.

(2) The amount of salaries tax so charged shall not exceed the amount which would have been chargeable had the standard rate been charged on the whole of- (a) the net assessable income as reduced by approved charitable donations provided for under section 12BA; or (b) in the case of a spouse chargeable to salaries tax under section 10 (3), the aggregate amount of his or her net assessable income and that of his or her spouse as reduced by approved charitable donations provided for under section 12BA. (Replaced 43 of 1989 s. 8) PART IV PROFITS TAX 14. Charge of profits tax Subject to the provisions of this Ordinance, profits tax shall be charged for each year of assessment at the standard rate on every person carrying on a trade, profession or business in Hong Kong in respect of his assessable profits arising in or derived from Hong Kong for that year from such trade, profession or business (excluding profits arising from the sale of capital assets) as ascertained in accordance with this Part: (Replaced 2 of 1971 s. 9 Amended 7 of 1986 s. 12) Provided that for the year of assessment commencing on 1 April 1975- (a) in the case of a corporation, profits tax shall be charged at the rate of 16 1/2%; and (b) in the case of a corporation to which a share of the assessable profits of a partnership is apportionable under section 22A and is charged in the partnership name under section 22, profits tax shall be charged on such share of the assessable profits at the rate of 16 1/2%; (Added 38 of 1975 s. 3) Provided further that for the year of assessment commencing on 1 April 1976 and all subsequent years of assessment up to and including the year of assessment commencing on 1 April 1979- (a) in the case of a corporation, profits tax shall be charged at the rate of 17%; and (b) in the case of a corporation to which a share of the assessable profits of a partnership is apportioned under section 22A and is charged in the partnership name under section 22, profits tax shall be charged on such share of the assessable profits at the rate of 17%; (Added 32 of 1976 s. 2. Amended 32 of 1981 s. 2) Provided further that for the year of assessment commencing on 1 April 1980 and all subsequent years of assessment up to and including the year of assessment commencing on 1 April 1983- (a) in the case of a corporation, profits tax shall be charged at the rate of 16 1/2%; and (b) in the case of a corporation to which a share of the assessable profits of a partnership is apportioned under section 22A and is charged in the partnership name under section 22, profits tax shall be charged on such share of the assessable profits at the rate of 16 1/2%; (Added 32 of 1981 s. 2. Amended 32 of 1984 s. 2) Provided further that for the year of assessment commencing on 1 April 1984 and all subsequent years of assessment up to and including the year of assessment commencing on 1 April 1986- (a) in the case of a corporation, profits tax shall be charged at the rate of 18 1/2%; and (b) in the case of a corporation to which a share of the assessable profits of a partnership is apportioned under section 22A and is charged in the partnership name under section 22, profits tax shall be charged on such share of the assessable profits at the rate of 18 1/2%; (Added 36 of 1984 s. 2. Amended 28 of 1987 s. 2) Provided further that for the year of assessment commencing on 1 April 1987- (a) in the case of a corporation, profits tax shall be charged at the rate of 18%; and (b) in the case of a corporation to which a share of the assessable profits of a partnership is apportioned under section 22A and is charged in the partnership name under section 22, profits tax shall be charged on such share of the assessable profits at the rate of 18%; (Added 28 of 1987 s. 2 Amended 28 of 1988 s. 3) Provided further that for the year of assessment commencing on 1 April 1988- (a) in the case of a corporation, profits tax shall be charged at the rate of 17%; and (b) in the case of a corporation to which a share of the assessable profits of a partnership is apportioned under section 22A and is charged in the partnership name under section 22, profits tax shall be charged on such share of the assessable profits at the rate of 17%; (Added 28 of 1988 s.

3. Amended 17 of 1989 s. 3) Provided further that for the year of assessment commencing on 1 April 1989 and all subsequent years of assessment up to and including the year of assessment commencing on 1 April 1991- (a) in the case of a corporation, profits tax shall be charged at the rate of 16 1/2%; and (b) in the case of a corporation to which a share of the assessable profits of a partnership is apportioned under section 22A and is charged in the partnership name under section 22, profits tax shall be charged on such share of the assessable profits at the rate of 16 1/2%; (Added 17 of 1989 s. 3. Amended 34 of 1992 s. 2) Provided further that for the year of assessment commencing on 1 April 1992 and all subsequent years of assessment- (a) in the case of corporation, profits tax shall be charged at the rate of 17 1/2%; and (b) in the case of a corporation to which a share of the assessable profits of a partnership is apportioned under section 22A and is charged in the partnership name under section 22, profits tax shall be charged on such share of the assessable profits at the rate of 17 1/2%.

(Added 34 of 1992 s. 2) 15. Certain amounts deemed trading receipts (1) For the purposes of this Ordinance, the sums described in the following paragraphs shall be deemed to be receipts arising in or derived from Hong Kong from a trade, profession or business carried on in Hong Kong- (a) sums, not otherwise chargeable to tax under this Part, received by or accrued to a person from the exhibition or use in Hong Kong of cinematograph or television film or tape, any sound recording, or any advertising material connected with such film, tape or recording; (b) sums, not otherwise chargeable to tax under this Part, received by or accrued to a person for the use of or right to use in Hong Kong a patent, design, trademark, copyright material or secret process or formula or other property of a similar nature, or for imparting or undertaking to impart knowledge directly or indirectly connected with the use in Hong Kong of any such patent, design, trademark, copyright, secret process or formula or other property; (c) sums received by or accrued to a person by way of grant, subsidy or similar financial assistance in connection with the carrying on of a trade, profession or business in Hong Kong, other than sums in connection with capital expenditure made or to be made by the person; (d) sums received by or accrued to a person by way of hire, rental or similar charges for the use of movable property in Hong Kong or the right to use movable property in Hong Kong; (e) (Repealed 7 of 1975 s. 7) (f) sums received by or accrued to a corporation carrying on a trade, profession or business in Hong Kong by way of interest derived from Hong Kong; (Replaced 19 of 1986 s. 2) (g) sums received by or accrued to a person, other than a corporation, carrying on a trade, profession or business in Hong Kong by way of interest derived from Hong Kong which interest is in respect of the funds of the trade, profession or business; (Replaced 19 of 1986 s. 2. Amended 17 of 1989 s. 4) (h) sums received by or accrued to a person by way of refund to that person of a contribution made by him as employer to an approved retirement scheme, but to the extent only that such sums were allowed as deductions in ascertaining the assessable profits of that person under this Part; (i) sums, not otherwise chargeable to tax under this Part, received by or accrued to a financial institution by way of interest which arises through or from the carrying on by the financial institution of its business in Hong Kong, notwithstanding that the moneys in respect of which the interest is received or accrues are made available outside Hong Kong; (Added 73 of 1978 s. 3) (j) sums received by or accrued to a corporation carrying on a trade, profession or business in Hong Kong by way of gains or profits arising in or derived from Hong Kong from the sale or other disposal or on the redemption on maturity or presentment of a certificate of deposit or bill of exchange; (Replaced 19 of 1986 s. 2) (k) sums received by or accrued to a person, other than a corporation, carrying on a trade, profession or business in Hong Kong by way of gains or profits arising in or derived from Hong Kong from the sale or other disposal or on the redemption on maturity or presentment of a certificate of deposit or bill of exchange where such gains or profits are in respect of the funds of the trade, profession or business; (Replaced 19 of 1986 s. 2. Amended 28 of 1987 s.

3; 17 of 1989 s. 4) (l) sums, not otherwise chargeable to tax under this Part, received by or accrued to a financial institution by way of gains or profits arising through or from the carrying on by the financial institution of its business in Hong Kong from the sale or other disposal or on the redemption on maturity or presentment of a certificate of deposit or bill of exchange notwithstanding that- (i) the moneys laid out for the acquisition of the certificate or bill were made available outside Hong Kong; or (ii) the sale, disposal or redemption is effected outside Hong Kong; and (Added 19 of 1986 s. 2. Amended 28 of 1987 s. 3) (m) sums received or receivable by a person as consideration in respect of the transfer of a right to receive income, as provided for in section 15A.

(Added 28 of 1987 s. 3) (1A) Subsection (1) (j) or (k) shall not apply to gains or profits arising in or derived from Hong Kong, other than gains or profits received by or accrued to a person whose trade, profession or business comprises or includes trading in certificates of deposit or bills of exchange, to the extent to which such gains or profits relate to a period prior to 1 April 1981; and gains or profits received by or accrued to any person from the sale or other disposal or on the redemption on maturity or presentment, on or after 1 April 1981, of a certificate of deposit or bill of exchange purchased or otherwise acquired by that person before that date, shall be determined by reference to such amount as the Commissioner may consider such certificate of deposit or bill of exchange would have realized if it had been sold in the open market at the close of business on 31 March 1981 and not by reference to the amount, if any, paid by that person in so purchasing or otherwise acquiring such certificate of deposit or bill of exchange. (Added 30 of 1981 s. 3) (1B) (Repealed 36 of 1984 s. 3) (2) Where, in ascertaining for the purposes of this Part the profits of a trade, profession or business carried on in Hong Kong, a deduction has been allowed for any debt incurred for the purposes of the trade, profession or business, then, if the whole or any part of that debt is thereafter released, the amount released shall be deemed to be a receipt of the trade, profession or business arising in or derived from Hong Kong at the time when the release was effected.

(3) Where in the basis period for any year of assessment a financial institution was not a financial institution for the whole of that period, in that, if the institution is a bank it was not licensed for the whole of that period or if the institution is a deposit-taking company it was not registered for the whole of that period, then subsection (l) (i) and (l) shall apply only in respect of such part of the basis period during which the bank or deposit-taking company was licensed or registered, as the case may be. (Added 73 of 1978 s. 3. Amended 19 of 1986 s. 2) (4) The amendments to this section effected by the Inland Revenue (Amendment) Ordinance 1984 (36 of 1984) shall not have the effect of rendering chargeable to tax sums received or accrued to any person prior to 1 April 1984 which were not chargeable to tax immediately prior to the coming into force of that Ordinance. (Added 36 of 1984 s. 3) (5) The amendments to this section effected by the Inland Revenue (Amendment) (No.

2) Ordinance 1986 (19 of 1986) shall apply to sums received or accrued by way of interest, gains or profits on or after 1 April 1986, and the provisions of this section in force immediately prior to the coming into force of that Ordinance shall continue to apply to such sums received or accrued prior to 1 April 1986 as if such amendments had not been enacted.

(Added 19 of 1986 s. 2) (Replaced 2 of 1971 s. 9. Amended 7 of 1986 s. 12) 15A. Transfer of right to receive income (1) Subject to subsection (3) where- (a) a right to receive income from property is transferred by a person to another person; and (b) consideration has been received or is receivable in respect of the transfer, the amount of the consideration shall, notwithstanding the exclusion relating to the sale of capital assets contained in section 14, be treated as a trading receipt arising in or derived from Hong Kong by the transferor from a trade, profession or business carried on in Hong Kong.

(2) The reference in subsection (1) to the amount of consideration shall, in the case where consideration is paid or given otherwise than in cash, be construed as a reference to the money value of the consideration.

(3) Subsection (1) shall not apply in relation to a transfer of a right to receive income from property where the right arose from the ownership by the transferor of a legal or equitable estate or interest in the property and, before or at the time of that transfer, the transferor also transferred that estate or interest to the transferee. (4) In this section- "income" means any profits, rent, interest or royalty chargeable to tax under Part IV; "property" means any property whatsoever; "right to receive income from property" means a right to have income that will or may be derived from property paid to, or applied or accumulated for the benefit of, the person owning the right.

(5) This section shall apply to any agreement made for the transfer of a right to receive income from property within the meaning of subsection (4) entered into or effected after 25 February 1987 other than an agreement made in pursuance of a legally enforceable obligation incurred on or before that date.

(Added 28 of 1987 s. 4) 15B. (Repealed 71 of 1983 s. 13) 15C. Valuation of trading stock on cessation of business Where a person ceases to carry on a trade or business in Hong Kong the trading stock of the trade or business at the date of cessation shall be valued for the purpose of computing the profits in respect of which that person is chargeable to tax under this Part as follows- (Amended 28 of 1964 s. 6; 26 of 1969 s. 12) (a) in the case of any such trading stock- (i) which is sold or transferred for valuable consideration to a person who carries on or intends to carry on a trade or business in Hong Kong; and (ii) the cost whereof may be deducted by the purchaser as an expense in computing the profits from such trade or business in respect of which such purchasers is chargeable to tax under this Part, the value thereof shall be taken to be the amount realized on the sale or the value of the consideration given for the transfer; (Amended 28 of 1964 s. 6) (b) in the case of any other such trading stock, the value thereof shall be taken to be the amount which it would have realized if it had been sold in the open market at the date of cessation. (Added 36 of 1955 s. 22. Amended 7 of 1986 s. 12) 15D. Post-cessation receipts and payments (1) Where a person who has ceased to carry on a trade, profession or business in Hong Kong, receives any sum which, if it had been received before such cessation, would have been included in the profits of the trade, profession or business in respect of which the person is chargeable to tax under this Part, then to the extent to which the sum has not already been included in such profits that sum shall be deemed to be profits of the trade, profession or business for the year of assessment in which the cessation occurred.

(2) Where a person who has ceased to carry on a trade, profession or business in Hong Kong pays any sum which, if it had been paid before such cessation, would have been deductible in computing the profits of the trade, profession or business in respect of which the person is chargeable to tax under this Part, then to the extent to which the sum has not already been deducted in computing such profits, that sum shall be deducted in ascertaining his profits for the year of assessment in which the cessation occurred. (Added 26 of 1969 s. 13. Amended 7 of 1986 s. 12) 16. Ascertainment of chargeable profits (1) In ascertaining the profits in respect of which a person is chargeable to tax under this Part for any year of assessment there shall be deducted all outgoings and expenses to the extent to which they are incurred during the basis period for that year of assessment by such person in the production of profits in respect of which he is chargeable to tax under this Part for any period, including- (a) where the conditions set out in subsection (2) are satisfied, sums payable by such person by way of interest upon any money borrowed by him for the purpose of producing such profits, and sums payable by such person by way of legal fees, procuration fees, stamp duties and other expenses in connection with such borrowing; (Replaced 2 of 1971 s. 11. Amended 36 of 1984 s. 4) (b) rent paid by any tenant of land or buildings occupied by him for the purpose of producing such profits, but not exceeding, in the case of rent paid to the tenant's spouse, or by a partnership to one or more of the partners thereof or to a spouse of any such partner, an amount equal to the assessable value of the land or buildings; (Amended 76 of 1975 s. 8; 8 of 1983 s. 11; 71 of 1983 s. 14)

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