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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 (Repealed)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 (Repealed)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 (Repealed)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)
(c) tax of substantially the same nature as tax imposed under this
Ordinance, proved to the satisfaction of the Commissioner to have been
paid elsewhere, whether by deduction or otherwise, by any corporation
which is managed and controlled in Hong Kong or by a person other than a
corporation who carries on a trade, profession or business in Hong Kong,
during the basis period for the year of assessment in respect of profits
chargeable to tax by virtue of section 15 (1) (f), (g), (i), (j), (k) or
(l); (Amended 7 of 1986 s. 12; 19 of 1986 s. 3)
Provided that no deduction shall be made under this paragraph if the
corporation or person concerned is eligible for relief under Part VIII in
respect of such profits; (Added 73 of 1978 s. 4. Amended 36 of 1984 s. 4)
(d) bad debts incurred in any trade, business or profession, proved to the
satisfaction of the assessor to have become bad during the basis period
for the year of assessment, and doubtful debts to the extent that they are
respectively estimated to the satisfaction of the assessor to have become
bad during the said basis period notwithstanding that such bad or doubtful
debts were due and payable prior to the commencement of the said basis
period:
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