INLAND REVENUE ORDINANCE

INLAND REVENUE ORDINANCE

LAWS OF HONG KONG

INLAND REVENUE ORDINANCE

CHAPTER 112





CHAPTER 112
INLAND REVENUE ORDINANCE
ARRANGEMENT OF SECTIONS
Section.....................................Page

PART I

~DUCTORY

1...............................Short title 8
2............................Interpretation 8
3. Establishment of Board of Inland Revenue. Power of Governor to appoint a
Commissioner and other officers ........13
3A............Exercise of powers and duties 14
4..........................Official secrecy 14

PART II
PRoPERTY TAx

5..........................Charge of property tax - is
SA.......Ascertainment of assessable value 19
5B.Ascertainment of assessable value on or after 1 April 1983 21
6...............................(Repealed) 22
7.Reduction and refund in case of unoccupied property 22
7A..........................Interpretation 22
7B.......Claims for refund of property tax 22
7C...............................Bad debts 23

PART III
SALARiEs TAx

8....................Charge of salaries tax 23
9......Definition of income from employment 26
10..........Agg.~tion of incomes of spouses 29
11...............................(Rdpealed) 29
IIA..............................(Repealed) 29
1 1B.....Ascertainment of assessable income 29
11C. Office or employment of profit ......................................................................... 29





Section..................................... Page
1 1D...............................Receipt of income 29
12.........................Adjustments to assessable income 31
12A...............................Treatment of losses 31
12B......................Ascertainment of net chargeable income 32
12BA..............................Charitable donation 33
13...........................Calculation of salaries tax 34

PART IV

PROMS TAX

14..............................Charge of profits tax 34
15.....................Certain amounts deemed trading receipts 36
15A......................Transfer of right to receive income 39
15B...................................(Repealed) 39
15C..............Valuation of trading stock on cessation of business 40
I5D......................Post-cessation receipts and payments 40
16.......................Ascertainment of chargeable profits 40
16A.......Special payment under an approved retirement scheme allowable as a
deduction .............................45
16B.......................Expenditure on scientific research 46
16C........................Payments for technical education 48
16D.........................Approved charitable donations 48
16E...................Purchase and sale of patent rights, etc . 49
17..............................Deductions not allowed 49
18...........................Basis for computing profits 50
18A..............Assessable profits for the year of assessment 197415 52
18B...Basis for computing assessable profit for years of assessment commencing on
1 April 1975 ..........................53
18C....Commencement of source of profits in years of assessment commencing on or
after 1 April 1974 ....................53
18D...Cessation of source of profits in years of assessment commencing on 1 April
1975 ..................................54
18E..................Change of accounting date and apportionments 57
18F........................Adjustment of assessable profits 58
19...............................Treatment of losses 58
19A. Computation of losses............................................................................................. 59





Section..................................... Page
19B..........................Approved charitable donations 60
19C......................Treatment of losses after 1 April 1975 60
19D.....................Computation of losses after 1 April 1975 62
19E...............................Adjustment of losses 62
20. Liability of certain non-resident persons 63
20A..................Persons chargeable on behalf of a non-resident 63
20B........Persons chargeable in respect of certain profits of a non-resident 64

21. Assessable profits of certain businesses to be computed on a percentage of the
turnover ..............................65
21A......Computation of assessable profits from cinematograph films, patents,
trademarks, etc . .....................66
22............................Assessment of partnerships 66
22A............Ascertainment of share of partnership profits or losses 67
23........Ascertainment of assessable profits of life insurance corporations 67
23A..Ascertainment of assessable profits of insurance corporations other than life
insurance corporations ................71

23AA. Mutual insurance corporations ......72
23B........Ascertainment of the assessable profits of a resident ship-owner 72
23C.......Ascertainment of the assessable profits of a non-resident ship-owner 73
24.........................Clubs, trade associations, etc . 75
25....................Deduction of property tax from profits tax 75

26. Exclusion of certain dividends and profits from the assessable profits of other
persons ...............................76
26A.....................Exclusion of certain profits from tax 76
27. (Repeated) .......................................................................... ...................... 77

PART V
(Repeated)

PART VI
DEPRECIATION, ETC.

34.......................................Initial and annual allowances, industrial buildings and structures 77
35.......................................Balancing allowances and charges, industrial buildings and structures 79
35A......................................Special provisions on termination of leasehold interest 80
35B......................................Buildings and structures bought unused so





Section.................................... Page
36...........Rebuilding allowance for a commercial building or structure 81
36A................Application of provisions to machinery or plant 81
37................Initial and annual allowances, machinery or plant 82
37A....Initial and annual allowances in respect of machinery and plant acquired
under hire purchase agreement .........84
38...............Balancing allowances and charges, machinery or plant 85
38A.....Determination of cost of individual assets sold together for one price 86
3811.....Commissioner's power to determine the true value of an asset on sale 86
38C.........Special provision as to allowances on a change in partnership 87
39........................Replacement of machinery or plant 87
39A...Reduction of allowances not to affect calculation of subsequent allowances 88
39B..Initial and annual allowances on machinery or plant under the pooling system 88
39C........................Pooling system when not to apply 90
391)..........Balancing allowances and charges under the pooling system 91
39E.....Allowances under this Part in respect of capital expenditure on leased
1 machinery and plant .................93
40.....................Interpretation ....1 97
40A.........Initial allowances in years of assessment 1974/75 to 1975/76 100

PART VII
PERSONAL AGREEMENT

40B................................Interpretation 101
41........................Election for personal assessment 101
42.....................Calculation of total income ...................................................... 102
42a. Husband and wife ................104
42B Allowances.......................... 104
43.......................................Rates of charge 109
43A......................................Interpretation 110

PART VIII
DOUBLE TAXATION RELIEF

44.......................................(Repealed) 1ll
45.......................................Relief in respect of Commonwealth income tax ill
46.......................................Official secrecy 112
47-48....................................(Repealed) 112
49.......................................Double taxation arrangements 112
50. Tax credits...............................................................................................................
..........................................113





Section................................... page

PART IX
RETURNS, ETC.

51,......................................Returns and information to be furnished 115
51A......................................Power to require statement of assets and liabilities etc . 118
51B......................................Power to issue search warrant 119
51C......................................Business records to be kept 121
51D......................................Rent records to he kept 121
52.......................................Information to be furnished by officials and employers 122
53.......................................Who may act for incapacitated or non-resident persons 123
54.......................................Liability of executor of deceased taxpayer 123
55.......................................(Repealed) 124
56.......................................Precedent partner to act on behalf of partnership 124
56A......................................Joint owners and co-owners 124
57.......................................Principal officer to act on behalf of a corporation or body of persons 125
58.......................................Signature and service of notices 125
58a Election by spoures to be separately charged .....................
PART X
ASSESSMENtS
59.......................................Assessor to make assessments 126
59A......................................Provisional assessments 128
60.......................................Additional assessments 128
61.......................................Certain transactions and dispositions to be disregarded 129
61A......................................Transactions designed to avoid liability for tax 129
61B......................................Utilization of losses to avoid tax 130
62.......................................Notice to be issued by Commissioner 131
63.......................................Validity of assessments, etc . 131
63A......................................Appointment ofagent in the United Kingdom 132

PART XA
PRovisioNAL SALum TAx

63B......................................Liability for provisional salaries tax 132
63C......................................Amount of provisional salaries tax 132
63D.....................................Demands for provisional salaries tax 134
63E......................................Holding over of payment of provisional salaries tax 135
63F......................................Provisional salaries tax to be applied against salaries tax 136





Section.................................... Page

PART XII
PRovisioNAL PRoms TAx

63G.......................................Liability for provisional profits tax 136
63H.......................................Amount of provisional profits tax 137
631.......................................Demands for provisional profits tax 138
63.1......................................Holding over of payment of provisional profits tax 138
63K.......................................Provisional profits tax to be applied against profits tax 139

PART XC
PRovimoNAL PRoPERTY TAx

63L.......................................Liability for provisional property tax 140
63M.......................................Amount of provisional property tax 140
63N.......................................Demands for provisional property tax 141
630.......................................Holding over of payment of provisional property tax 141
63P.......................................Provisional property tax to be applied against property tax 142

PART XI
OWEMONS AND APPEAis

64........................................Objections 142
65........................................Constitution of the Board of Review 145
66........................................Right of appeal to the Board of Review 145
67. Transfer of appeals under section 66 for hearing and determination by High
Court instead of Board of Review ......146
68........................................Hearing and disposal of appeals to the Board of Review 147
69........................................Appeals to the High Court 149
69A.......................................Right to appeal directly to Court of Appeal against decision of Board of
Review ................................150
70........................................Assessments or amended assessments to be final 151
70A.......................................Powers of assessor to correct errors 151
70B.......................................Husband and wife 152
PART XII
PAY~ AND REcovERY oF TAx
71........................................Provisions regarding payment of tax 152
72........................................Tax to include fines, etc . 155
73-74. (RepeaL-d) .......................156
75........................................Tax recoverable as a civil debt through the District Court 156





Section Page

75A Recovery of tax from wife. ........

76.......................................Recovery of tax from a debtor of the taxpayer 157
77.......................................Recovery of tax from persons leaving Hong Kong 157
77A......................................Refusal of clearance to ships and aircraft where tax is in default 158
78.......................................(Repealed) 159

PART XIII
REPAYMENT

79......................................Tax paid in excess to be refunded 159

PART XIV
PENALTIES AND OFFENCES

80......................................Penalties for failure to make returns, making incorrect returns, etc . 160
80A.....................................(Repealed) 161
81......................................Breach of secrecy and other matters to be offences 161

82........................Penal provisions relating to fraud, etc . 1 161

82A......................................Additional tax in certain cases 162
82B......................................Appeals against assessment to additional tax to Board of Review 164
83.......................................Tax payable notwithstanding proceedings 164
84.......................................Prosecutions, sanction of Commissioner 164

PART XV

GENERAL

85.......................................Power to make rules 165
86.......................................Board of Inland Revenue to specify forms 165
87.......................................General power of Governor in Council to exempt 166
87A......................................Approval of retirement schemes 166
88.......................................Exemption of charitable bodies 166

Schedule 1................................Standard Rate 166
Schedule 2................................Rates 167
Schedule 3................................Public Utility Companies 171
Schedule 4. Percentage reduction specified for the purposes of s. 42B(1)..........171





CHAPTER 112

INLAND REVENUE

To impose a tax on property, earnings and profits.
(Amended 26 of 1969 s. 2; 17 of 1989 s. 2)

[3 May 19471

Originally 20 of 1947 (Cap. 112,1950) -20 of 1948,3 of 1949,9 of 1950, 10 of 1950,30 of 1950,37
of 1950, 16 of 1951, 36 of 1954, 36 of 1955, 49 of 1956, 9 of 1958, G.N.A. 100 of 1960, 11 of
1961,28 of 1964,35 of 1965, L.N. 138 of 1965,15 of 1966,35 of 1966, L.N. 8 of 1968, L.N. 100
of 1968,26 of 1969,35 of 1969,39 of 1969,51 of 1969,65 of 1970,2 of 1971,13 of 1971,26 of
1972, 40 of 1972, 8 of 1973, 33 of 1973, L.N. 162 of 1973, L.N. 218 of 1973, 68 of 1973, 16 of
1974,23 of 1974, L.N. 161 of 1974, L.N. 5 of 1975, 7 of 1975, L.N. 60 of 1975, L.N. 66 of 1975,
38 of 1975, 41 of 1975, 43 of 1975, 62 of 1975, 76 of 1975, 92 of 1975, 32 of 1976, L.N. 191 of
1976, L.N. 15 of 1977,32 of 1977, L.N. 91 of 1978,51 of 1978, L.N. 151 of 1978,61 of 1978,62
of 1978, 73 of 1978, 79 of 1978, L.N. 1 of 1979, 7 of 1979, 9 of 1979, 12 of 1979, 29 of 1979, 36
of 1979, 39 of 1979, 48 of 1979, 68 of 1979, 79 of 1979, L.N. 53 of 1980, 20 of 1980, 34 of 1980,
48 of 1980, 63 of 1980, L.N. 348 of 1980, L.N. 377 of 1980, 10 of 1981, L.N. 137 of 1981, 30 of
1981, 32 of 1981, 71 of 1981, L.N. 359 of 1981, 74 of 1981, 76 of 1981, 79 of 1981, L.N. 17 of
1982, 5 of 1982, L.N. 57 of 1982, 9 of 1982, 29 of 1982, L.N. 18 of 1983, 8 of 1983, 13 of 1983,
35 of 1983, 62 of 1983, 71 of 1983, 36 of 1984, 52 of 1984, L.N. 411 of 1984, 7 of 1985, 11 of
1985,21 of 1985, L.N. 262 of 1985, 7 of 1986, L.N. 65 of 1986,19 of 1986,27 of 1986, R. Ed.
1986, 28 of 1987, 36 of 1987, 69 of 1987, 28 of 1988, 85 of 1988, 4 of 1989, 10 of 1989, 17 of
1989, L.N. 164 of 1989, L.N. 262 of 1989, 3 ef fo , 43 pf &I ' f---r fl).
Ir

PART 1

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-
Itactive 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;
tlagenC, 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,or the Urban Council, for charitable
purposes; (Replaced 13 of 197176 of 19 75 s. 2; 74 of
1981s.4)
'approved retirement scheme' means a retirement scheme or part thereof
approved for the time being by the Commissioner under section 87A;
(Added49of]956s.3. Amended 7of 1986s. 2)
'assessable income' means the assessable income of a person in any year of
assessment as ascertained in accordance with sections 11 B, 11 C and 11 D;
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)
~lassessor' means an assessor appointed under this Ordinance;
Itassistant 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 persons' means any body politic, corporate or collegiate and any
company, fraternity, fellowship and society of persons whether corporate
ornotcorporate; (Added36 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; (Added30of]98]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
1971s.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); (Added29of 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 under that Ordinance had it
not been so exempt; (Replaced 27 of 1986 s. 137)
'Governor' means the Governor of Hong Kong and includes the officer for the
time being administering the Government; (Added36 of 1955 s. 3)
'Hong Kong currency' means money which is legal tender in Hong Kong;
(Added29 of 1982 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
4 1955s.3)
'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 instru-
ments 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 1213; (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;
14profits 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)
'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 YCA,
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. Amended8 of 1973s. 2; 7of]975s. 2;8of 1983s.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' mean the lawful wife of any person married to him by a Christian
marriage or its civil equivalent, or in the case of a Chinese or any other
Asiatic the principal spouse; (Added 36 of 1955 s. 3)
'wife living apart from her husband' mean -
(a) a wife who is living apart from her husband-
(i) under a decree or order of a competent court within or
outside Hong Kong;
(ii) under a duly executed deed of separation; or
(iii) in such circumstances that in the opinion of the
Commissioner the separation is likely to be permanent; or
(b) a wife who is a permanent resident as defined in section 41, but
whose husband is neither such a permanent resident nor a
temporary resident as defined by section 41; (Replaced 26 of
1969 s. 3)
'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
(e)a corporation which is under the control of the same person as is
the bank or deposit-taking companytleontrol', 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. 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. (Added8of 1983s.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. (Added8of 1983s.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. (Amended9of]958s.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. (Amended39of]969s.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 refief 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)
(e)to the Attorney General, or any public officer authorized by him,
for the purpose of reporting under section 68(5) an appeal to the
BoardofReview. (Added2ofl97]s.3)
(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)
(IA) 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 513-
(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
1983s.4)
(IB) The percentage allowance specified in subsection (IA) 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 sub-
section, 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
1986s.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)
(M) Except for the purposes of section 513(5)-
(a)the words 'throughout the whole of that year' and 'the whole
of ' in subsection (2)(a);
(b) subsection (2)(b); and
(c) subsections (3), (4) and (5),
shall not apply to any year of assessment commencing on or after 1 April 1983.
(Added 8 of 1983 s. 4)
(3) Notwithstanding subsection (1)- (Amended2of]971 s. 4; 5of 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 Vong, 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 Cong, (Amended L.N. 17 of 1982;
L.N. 18 of 1983)
and occupied by such person, clan, family and Cong 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
Cong, 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 Cong 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 513(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. (Added8of 1983s. 5)
(IA) 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 1 or authorized or fixed
under Part 11 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 (311), 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 (IA) or (2)
apply, be reduced to the annual rent. (Added 5 of 1982 s. 3)





(313) 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. (Added5of1982
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 1, 11 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
1983s.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]955s.8. Amended8of 1973s. 3; fflof 1974s. 3; 76of 1975s. 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)
9and 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)
(Added36 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 sub-
section (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 513(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 111

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.
(IA) 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
tosuchservices; (Amended69 of 1987s. 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 1981 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. (Added69 of 1987s. 2)
(IB) In determining whether or not all services are rendered outside Hong
Kong for the purposes of subsection (IA) 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. (Added2of]97]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. Amended36of 1987s. 42;85 of 1988s. 48)
(ca) in the case of a pension attributable to services rendered in any
office or employment, other than employment by the Govern-
ment, so much of the pension as is not attributable to services
rendered in Hong Kong; (Added2of]97]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 Governments 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 offices under those Governments;
(e)wound and disability pensions granted to members of Her
Majesty's forces;
gratuities granted to members of Her Majesty's forces in respect
of services rendered during war;
(g)any amount arising from a scholarship, exhibition, bursary, or
other similar educational endowment held by a person receiving
full time instruction at a university, college, school, or other
similar educational establishment; (Replaced 26 of 1969 s. 9)
(h)the emoluments payable by the Government of the United
Kingdom to persons in the temporary service of that Govern-
ment 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; (Added26of]969s.9)
(i)any amount received by way of periodical payments in the nature
of alimony or maintenance by a woman from her husband or
former husband; (Added 35 of 1965 s. 5)
(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 failing partly within each of the basis
periods for 2 consecutive years of assessment, one of which
is that year of assessment; (Added2of]97]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
1986s.3)
(Replaced 36 of 1955 s. 11.Amended.15of 1966s.2; 7of 1986s. 12)

9. Definition of income ftom 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; and
(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 efrects of the employee; (Amended 3 of 1949 s. 4;
9 of 1950 Schedule; 2 of 1971 s. 6; 40 of 1972 s. 2)
(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
1975s.2)
(e)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. (Added2of]971s.6)




(IA) (a)Notwithstanding subsection (1)(a), where an employer or
associated corporation refunds all or part of the rent paid by the
employee, such refund shall be deemed not to be income;
(b)a place of residence in respect of which an employer or associated
c . orporation has 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;
(c)a place of residence in respect of which an employer or associated
corporation has 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 paid by the employee and the part
thereof refunded by the employer or associated corporation.
(Added36 of 1954 s. 2. Amended38of1975s.2)
(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 111 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)





(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 or for the grant of
the right or 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,
(a 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;
'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; (Added38of]975s.2)
'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. (Added48of
1979s.2)

10. Aggregation of incomes of spouses

In the case of a husband and wife, not being a wife living apart from her
husband-
(a) salaries that shall be payable on their net chargeable income; and
(b) the husband shall, subject to section 13(2), be solely charged to
salaries tax in respect of their net chargeable income.
(Replaced 71 of 1983 s. 3)

11 (Repeated 71 of 1983 s. 4)

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.
(Added8of 1973s. 5. Amended71 of 1983s. 5)

11C. Office or employment of profit

For the purpose of section 11 B, 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 11 B-
(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, notwith-
standing 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.
(Added8of 1973s. 5.Amended 71 of 1983s. 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, not being a wife living apart from
her husband, 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 from the assessable
income of the other spouse for the purpose of determining the net assessable
income of that other spouse in that year.
(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) In the case of a husband and wife, not being a wife living apart from
her husban
(a) effect shall be given to section 12(3) before the amount of any
excess to be carried forward and set ofF under this section is
computed under subsection (1); and
(b)any excess so computed after effect is given to section 12(3)
shall-
(i) be set off, first in the year of assessment next succeeding the
year of assessment in respect of which the excess occurred,
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
(ii) then, and so far as it cannot be set off in accordance with
subparagraph (i), be set off in the next following year of
assessment, primarily against he assessable income of the
other spouse,
and so on from year to year until the excess has been completely
set off.
(Replaced 7 of 1975 s. 4.1983s.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 section 42B(1) permitted for that
person.





(2) In the case of a husband and wift, not being a wife living apart from
her husband, they shall have but one net chargeable income, whether or not
they elect under section 58A to be separately charged, and it shall be such
amount as is arrived at after deducting from the aggregate of their net
assessable incomes-

(a)such approved charitable donations as are provided for under
sectio 12BA; and
(b) such allowances as are under section 42B(1) permitted in their
case.

(3) Notwithstanding subsection (2)(b),for the purpose of ascertaining the
net chargeable income for any year of assessment of a husband and wife, not
being a wife living apart from her husband, no allowance under section 42B(1)(e)
in any year of assessment shall granted unless the husband has, in such year
of assessment, assessable income other than income of his wife which is
aggregated with his under subsection (2). (Added 28 of 1988 s. 2)
(Replaced 71 of 1983 s. 10)

12BA. Charitable donation

(1) The amount of charitable donations that, in ascertaining net
chargeable income, may be deducted-
(a) from the net assessable income of a person; or
(b) in the husband and wife, not being a wife living apart
from her husband, from the aggregate of their net assessable
incomes,
shall be, subject to subsections (2) and (3), the aggregate of approved charitable
donations which are made during that year by that person and, where
paragraph (b) applies, by such wife, if in any case such aggregate amount is not
less than $100.
(2) Every deduction claimed by virtue of subsection (1) shall be claimed
on the form specified by the Board of Inland Revenue and the deduction shall
be permitted only if the claim contains such particulars and is supported by
such proof as the Commissioner may require.
(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 hushand and wife, not being a wife liviing
apart from her husband, 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).
(Added 71 of 1983 s. 11)

13. Calculation of salaries tax

(1) 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 the provisions of this Part:
Provided that-
(a) (Repealed 8 of 1973 s. 6)
(b)in no case shall the amount of salaries tax charged exceed the
amount which would have been chargeable had the standard rate
been charged on the whole of-
(i) the net assessable income as reduced by approved charitable
donations provided for under section 12BA; or
(ii) in the case of a husband and wife, not being a wife living
apart from her husband, the aggregate of their net assessable
incomes as reduced by approved charitable donations
provided for under section 12BA. (Replaced 71 of 1983
s.12)
(2) Where a husband and wife elect under section 58A to be separately
charged in respect of any year of assessment, each spouse shall in respect of that
year of assessment be charged such proportion of the salaries tax that is payable
under subsection (1) as the net assessable income of that spouse bears to the
aggregate of their net assessable incomes. (Added 71 of 1983 s. 12)

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 161%; 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
of161%; (Added38of]975s.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
of17%; (Added 32 of 1976s.2. Amended32of 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 161%; 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 161%; (Added 32 of 1981 s. 2. Amended 36 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
ofl8J%; (Added36 of 1984s. 2. Amended28 of 1987s. 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
of18%; (Added28 of 1987s. 2. Amended28of 1988s.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 partership name under section 22, profits tax shall
be charged on such share of the assessable profits at the rate of
17%; (Added28 of 1988s.3. Amended ]7of 1989 s. 3)
Provided further that for the year of assessment commencing on 1 April
1989 and all subsequent years of assessment-
(a)in the case of a corporation, profits tax shall be charged at the
rate of 161%; and
2
(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 161%. (Added 17 of 1989 s. 3)

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)
(j)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 1987s. 3; 17 of 1989 s. 4)
(1)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. (Added28 of 1987s. 3)
(IA) 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 198 1, 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)
(1 B) (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 (1)(i) and (1) 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
thatOrdinance.(Added36 of 1984s.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
1986s.2)
(Replaced2of]97]s.9. Amended 7of 1986s. 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 198 7 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- (Amended28of]964s.6,-26of
1969s.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 purchaser 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.
(Added36 of 1955 s. 22. Amended 7of 1986s. 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)(j), (g), (i), (j), (k) or (I): (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
1978s.4. Amended36of 1984s. 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:
Provided that-
(i) deductions under this paragraph shall be limited to debts
which were included as a trading receipt in ascertaining the
profits, in respect of which the person claiming the deduction
is chargeable to tax under this Part, of the period within





which they arose, and debts in respect of money lent, in the
ordinary course of the business of the lending of money
within Hong Kong, by a person who carries on that
business; (Amended 7 of 1986 s. 12)
(ii)all sums recovered during the said basis period on account of
amounts previously allowed in respect of bad or doubtful
debts shall for the purposes of this Ordinance be treated as
part of the profits of the trade, business or profession for
that basis period;
(e)expenditure incurred in the repair of any premises, plant,
machinery, implement, utensil or article employed in the
production of such profits;
expenditure incurred in the replacement of any implement,
utensil or article employed in the production of such profits:
Provided that no allowances have been or shall be made
under the provisions of Part VI in respect of such implement,
utensil or article;
(g)notwithstanding section 17, a sum expended for the registration
of a trade mark, design or patent used in the trade, profession or
business which produces such profits; (Replaced 26 of 1969 s. 14)
(ga) the payments and expenditure specified in sections 16B and 16C,
as provided therein;
(h)such other deductions as may be prescribed by any rule made
under this Ordinance.
(2) The conditions referred to in subsection (1)(a) are that-
(a) the money has been borrowed by a financial institution;
(b)the money has been borrowed by a public utility company
specified in Schedule 3 at a rate of interest not exceeding the rate
specified by the Financial Secretary by notice in the Gazette;
(Amended 17 of 1989 s. 5)
(c)the money has been borrowed from a person other than a
financial institution or an overseas financial institution and the
sums payable by way of interest are chargeable to tax under this
Ordinance;
(d)the money has been borrowed from a financial institution or an
overseas financial institution and the repayment of the principal
or interest is not secured or guaranteed either in whole or in part,
and whether directly or indirectly, by any instrument executed or
any undertaking given-
(i) by or on behalf of the borrower or any partner of the
borrower;
(ii) where the borrower is a body of persons, whether corporate
or unincorporate, by or on behalf of any shareholders,





member, director or member of the board of management of
the borrower; or
(iii) where the borrower is a corporation, by or on behalf of any
associated corporation,
against a deposit made with that or any other financial institution
or overseas financial institution where any sums payable by way
of interest on the deposit are not chargeable to tax under this
Ordinance; (Amended 7 of 1986 s. 4)
(e) the money has been borrowed wholly and exclusively to
finance~-
(i) capital expenditure incurred on the provision of machinery
or plant which qualifies for an allowance under Part VI; or
(ii) the purchase of trading stock, and such stock is used
by the borrower in the production of profits chargeable to
tax under this Part,
and the lender is not-
(A) any partner of the borrower; or
(B)where the borrower is a body of persons, whether
corporate or unincorporate, any shareholder, member,
director or member of the board of management of the
borrower; or
(C)where the borrower is a corporation, any associated
corporation; (Replaced 36 of 1984 s. 4. Amended 7 of
1986s.4)
the person chargeable to tax is a corporation and the deduction is
in respect of interest payable by that corporation-
(i) on debentures;
(ii) to the holder of any instrument issued-
(A)bona fide and in the course of carrying on business
and which is marketable in Hong Kong or in a major
financial centre outside Hong Kong approved by the
Commissioner for the purposes of this subparagraph;
or
(B)in pursuance of any agreement or arrangements, where
the issue of an advertisement or invitation to the public
in respect of such agreement or arrangements, or
any document which contains such an advertisement
or invitation, has been authorized by the Securities
and Futures Commission under section 4(2)(g) of
the Protection of Investors Ordinance (Cap. 335); or
(Amended 10 of 1989 s. 65)
(iii)on moneys borrowed from an associated corporation, where
the moneys borrowed in the hands of the associated





corporation arise entirely from the proceeds of an issue by
the associated corporation of debentures or of any such
instrument as is described in subparagraph (ii), in an amount
not exceeding the interest payable by the associated
corporation to the holders of its debentures or of such
instruments. (Added 7 of 1986 s. 4)
(3) For the purposes of subsection (2)--
(a)any reference in paragraph (d)(i) or (ii) or paragraph (e)(A) or
(B) to-
(i) a borrower or partner of a borrower; or
(ii) a shareholder, member, director or member of the board of
management,
who is a natural person, shall be deemed to extend to that
person's parents, spouse, child, brother or sister (whether of
the whole or half blood) and, in deducing such a relationship,
an adopted child shall be deemed to be a child both of the
natural parents and of the adopting parent and a step child
to be the child both of the natural parents and of any step
parent;
(b) an 'associated corporation' means-
(i) a corporation over which the borrower has control;
(ii) a corporation which has control over the borrower; or
(iii)a corporation which is under the control of the same person
as the borrower,
and, for the purposes of this definition, control shall have the
same meaning as it has in section 2(2);
(ba) 'debentures' means debentures listed on a stock exchange in
Hong Kong or any other stock exchange recognized for the
purposes of this paragraph by the Commissioner; (Added 7 of
1986s.4)
(c)an 'overseas financial institution' means a person carrying on
the business of banking or deposit-taking outside Hong Kong
other than a person whom the Commissioner has, in accordance
with the powers vested in him by subsection (4), determined
shall not be recognized for the purposes of subsection (2) as
an overseas financial institution. (Added 36 of 1984 s. 4.
Amended 7 of 1986 s. 12)
(M) The rate of interest which was applicable for the purposes of
subsection (2)(b) immediately before this section was amended by the Inland
Revenue (Amendment) (No. 2) Ordinance 1989 (17 of 1989) shall be applicable
for the purposes of this section as amended by that Ordinance until a difrerent
rate of interest specified by the Financial Secretary under this section as so
amended takes effect.(Section 22(1) of 17 of 1989 incorporated)





(4) The Commissioner may for the purposes of subsection (2) determine
that a person shall not be recognized as an overseas financial institution if he is
of the opinion that that person's banking or deposit-taking business is not
adequately supervised by a supervisory authority. (Added36 of 1984s. 4)
(5) The amendments to this section effected by the Inland Revenue
(Amendment) Ordinance 1984 (36 of 1984) shall not have the effect of
disallowing any deduction under subsection (1)(a) which could lawfully have
been made immediately prior to the coming into force of that Ordinance where
the deduction is in respect of sums payable prior to 1 April 1984. (Added36of
1984 s. 4. Amended 7 of 1986 s. 4)
(6) The Governor in Council may, by notice in the Gazette, amend
Schedule 3. (Added 17 of 1989 s. 5)
(Replaced 28 of 1964 s. 7. Amended35of1965s.9)

scheme allowable as a deduction

(1) Where a person carrying on a trade, profession or business in Hong
Kong makes a payment which is either- (Amended 7 of 1986 s. 12)
(a)a contribution, other than an ordinary annual contribution, to
a fund duly established under an approved retirement scheme;
or
(b)a premium, other than an ordinary annual premium, in respect of
a contract of insurance under an approved retirement scheme,
such payment shall, to the extent that it is made in respect of individuals
employed by such person for the purposes of producing profits in respect of
which he is chargeable to tax under this Part and that it is not excessive in view
of all the relevant circumstances, be deemed to be an expense wholly and
exclusively incurred in the production of such profits and shall be allowed as a
deduction therefrom in accordance with subsection (2).
(2) For the purpose of making the deduction provided for in subsection
(1), one fifth part of the payment shall be deemed to have been expended during
the basis period in which the payment was actually made and the remaining 4
parts shall be deemed to have been expended at the rate of one part in the basis
period for each of the succeeding 4 years of assessment:
Provided that in no case shall the total amount of the deductions exceed
the amount of the payment.
(3) For the avoidance of doubt it is hereby declared that this section is
applicable only to payments made in or after the basis period for the year of
assessment commencing on 1 April 1955.
(Replaced 49 of 1956 s. 12)





16B. Expenditure on scientific research

(1) Notwithstanding anything in section 17, in ascertaining the profits
from any trade or business in respect of which a person is chargeable to tax
under this Part for any year of assessment there shall, subject to subsection (2),
be deducted the following payments made, and expenditure incurred, by such
person during the basis period for that year of assessment (other than any
amount which is allowable as a deduction apart from this section), namely-
(a) payments to-
(i) an approved research institute for scientific research related
to that trade or business; or
(ii)an approved research institute, the object of which is the
undertaking of scientific research related to the class of trade
or business to which that trade or business belongs; and
(b)expenditure on scientific research related to that trade or
business, including capital expenditure except to the extent that it
is expenditure on land or buildings or on alterations, additions or
extensions to buildings.
(2) Where any payment or expenditure to which this section refers is
made or incurred outside Hong Kong and the trade or business in relation to
which it is so made or incurred is carried on partly in and partly out of
Hong Kong, the deduction allowable under this section shall be such part
of the amount which would otherwise be allowable as is reasonable in the
circumstances. (Amended 7 of 1986 s. 12)
(3) (a)Where any plant or machinery, representing scientific research
expenditure of a capital nature which pursuant to subsection
(1)(b) has been allowed as a deduction in ascertaining the profits
from a trade or business, ceases to be used by the person
carrying on the trade or business for scientific research related to
that trade or business and is then or thereafter sold by him, the
proceeds of sale shall be treated as a trading receipt of the trade
or business accruing at the time of the sale or, if the sale occurs
on or after the date on which the trade or business is
permanently discontinued, accruing immediately before the
discontinuance.
(b)Where any such plant or machinery is destroyed, it shall for the
purposes of paragraph (a) be treated as if it had been sold
immediately before the destruction thereof and any insurance
moneys or other compensation of any description received by
the person carrying on the trade or business in respect of the
destruction and any money received by him in respect of the
remains of the plant or machinery shall be treated as if they were
proceeds of that sale.





(c)The reference in paragraph (a) to the time of sale shall be
construed as a reference to the time of completion or the time
when possession is given, whichever is the earlier.
(4) (a) In this section-
,,an approved research institute' means any university, college,
institute, association or organization which is approved in
writing for the purposes of this section by the Director of
Education as an institute, association or organization for
undertaking scientific research which is or may prove to be
of value to Hong Kong; (Amended 7 of 1986 s. 12)
',scientific research' means any activities in the fields of natural
or applied science for the extension of knowledge.
(b) An approval for the purposes of paragraph (a) may-
(i) operate as from a date, whether before or after the date of
approval, specified in the instrument of approval; and
(ii) be withdrawn at any time.
(5) In this section-
(a)references to expenditure incurred on scientific research do not
include any expenditure incurred in the acquisition of rights
in, or arising out of, scientific research, but, save as aforesaid
and subject to subsection (1)(b), include all expenditure incurred
for the prosecution of, or the provision of facilities for the
prosecution of, scientific research; and
(b)references to scientific research related to a trade or business or
class of trade or business shall be read as including a reference
to-
(i) any scientific research which may lead to or facilitate an
extension, or an improvement in the technical efficiency, of
that trade or business, or, as the case may be, of trades or
businesses of that class; and
(ii) any scientific research of a medical nature which is of special
relation to the welfare of workers employed in that trade or
business or, as the case may be, in trades or businesses of
that class.
(6) For the purposes of this section-
(a)expenditure shall not be regarded as incurred by a person in so
far as it is, or is to be, met directly or indirectly by the Crown
or by any government or public or local authority, whether in
Hong Kong or elsewhere, or by any person other than the
first-mentioned person; and (Amended 7 of 1986 s. 12)
(b)any expenditure of a capital nature incurred on scientific research
related to any trade or business by a person about to carry on
that trade or business shall be treated as if it had been incurred by





that person on the first day upon which he does carry on that
trade or business.
(7) The same sums paid, or expenditure incurred, shall not be taken into
account for any of the purposes of this section in relation to more than one
trade or business.
(Added 35 of 1965 s. 10)

16C. Payments for technical education

(1) Notwithstanding anything in section 17, where a person carrying
on a trade or business in Hong Kong makes any payment to be used for the
purposes of technical education related to that trade or business at any
university, university college, technical college or other similar institution which
is approved in writing for the purposes of this section by the Director of
Education (being an amount which is not otherwise allowable as a deduction
under this Ordinance), the payment shall be deducted as an expense in
ascertaining the profits from that trade or business for the year of assessment in
the basis period of which the payment was made. (Amended 7 of 1986 s. 12)
(2) For the purposes of this section, technical education shall be deemed
to be related to a trade or business, if, and only if, it is technical education of a
kind specially requisite for persons employed in the class of trade or business to
which that trade or business belongs.
(3) An approval for the purposes of subsection (1) may-
(a)operate as from a date, whether before or after the date of
approval, specified in the instrument of approval; and
(b) be withdrawn at any time.
(Added 35 of 1965 s. 10)

16D. Approved charitable donations

(1) Subject to subsection (2), a person chargeable to tax under this Part
may deduct the aggregate of approved charitable donations made by that
person in the basis period for a year of assessment, if such aggregate is not less
than 5100, from what would otherwise have been the assessable profits of such
person for that year of assessment.
(2) A person shall not be entitled under subsection (1) to deduct for any
year of assessment-
(a)any sum which is allowable as a deduction under section 12(1)(c),
16, 16B or 16Q
(b)a sum in excess of 10% of such balance of that person's
assessable profits after making any adjustment for the allowances
and charges provided under Part VI.
(Added 7 of 1975 s. 10)





16E. Purchase and sale of patent rights, etc.

(1) Notwithstanding anything in section 17, in ascertaining the profits from
any trade, profession or business in respect of which a person is chargeable to tax
under this Part for any year of assessment there shall, subject to subsection (2),
be deducted any expenditure incurred by such person during the basis period for
that year of assessment (other than any amount which is allowable as a
deduction apart from this section) on the purchase of patent rights or rights to
any trade mark or design, for use in Hong Kong in the trade, profession or
business in the production of such profits. (Amended 7 of 1986 s. 12)
(2) Where any rights of a kind referred to in subsection (1) are purchased
partly for use in Hong Kong and partly for use outside Hong Kong the
deduction allowable under this section shall be such part of the expenditure
referred to in subsection (1) as is, having regard to the extent of the use in Hong
Kong, reasonable and appropriate in the circumstances of the case. (Amended
7 of 1986 s. 12)
(3) Where any rights of a kind referred to in subsection (1) in respect of
which a deduction has been allowed to any person under this section in
ascertaining the profits from a trade, profession or business are thereafter sold
by hirn-
(a) the proceeds of sale; or
(b)if the deduction was one to which subsection (2) applied, such
part of the proceeds of sale as relates to the rights in respect of
which a deduction was allowed under that subsection,
not being an amount otherwise chargeable to tax under this Part, shall,
notwithstanding the exclusion relating to the sale of capital assets contained in
section 14, be treated as a trading receipt of the trade, profession or business
accruing at the time of sale, or if the sale occurs on or after the date on which
the trade, profession or business is permanently discontinued, accruing
immediately before the discontinuance.
(4) In this section-
(a)'patent rights' means the right to do or authorize the doing of
anything which would, but for that right, be an infringement of a
patent; and
(b)a reference to the purchase or sale of rights of a kind referred to
in subsection (1) includes a reference to the purchase or sale of a
share or interest in any such rights.
(Added 35 of 1983 s. 2)

17. Deductions not allowed

(1) For the purpose of ascertaining profits in respect of which a person is
chargeable to tax under this Part no deduction shall be allowed in respect of-
(Amended 36 of 1955 s. 25; 49 of 1956 s. 13)





(a)domestic or private expenses, including the cost of travelling
between residence and place of business;
(b)any disbursements or expenses not being money expended for the
purpose of producing such profits; (Amended 36 of 1955 s. 25)
(c)any expenditure of a capital nature or any loss or withdrawal of
capital;
(d) the cost of any improvements;
(e)any sum recoverable under an insurance or contract of indemnity;
rent of, or expenses in connection with, any premises or part of
premises not occupied or used for the purpose of producing such
profits; (Amended 36 of 1955 s. 25)
(g)any tax paid or payable under this Ordinance other than salaries
tax paid in respect of employees' remuneration; (Replaced 3 of
1949 s. 7. Amended 35 o 1955 s. 25)
If
(h)any sum paid by an employer being either an ordinary annual
contribution to a fund duly established under an approved
retirement scheme or an ordinary annual premium in respect of a
contract of insurance under an approved retirement scheme, to the
extent that the aggregate of such payments in respect of an
employee under an approved retirement scheme or schemes exceeds
15% of the total emoluments of that employee for the period in
respect of which the payment is made; (Replaced 49 of 1956 s. 13.
Amended 2 of 1971 s. 12; 7 of 1986 s. 5)
(i)any provision made for the payment in respect of an employee of
any sum referred to in paragraph (h), to the extent that the
aggregate of such provision and any such payment as is referred
to in that paragraph exceeds 15% of the total emoluments of that
employee for the period in respect of which the provision is
made; or (Added 7 of 1986 s. 5)
(j)any provision made in respect of a retirement scheme other
than for the payment of any sum referred to in paragraph (h).
(Added 7 of 1986 s. 5)
(2) In computing the profits or losses of a person carrying on a trade,
profession or business, nothing shall he deducted for salaries or other
remuneration of, or for interest on capital or loans provided by, that person's
spouse or, in the case of a partnership, any partner therein or any partner's
spouse. (Replaced 71 of 1983 s. 15)

18. Basis for computing profits

(1) Save as provided in this section, the assessable profits for any year of
assessment from any trade, profession or business carried on in Hong Kong





shall be computed on the full amount of the profits therefrom arising in or
derived from Hong Kong during the year preceding the year of assessment.
(2) Where the Commissioner is satisfied that the accounts of a trade,
profession or business carried on in Hong Kong are usually made up to some
day other than 31 March, he may direct that the assessable profits from that
source be computed on the amount of the profits therefrom arising in or derived
from Hong Kong during the year ending on that day in the year preceding the
year of assessment. Where, however, the assessable profits from any trade,
profession or business have been computed by reference to an account made up
to a certain day, and no account is made up to the corresponding day in the
year following, the assessable profits from that source both for the year of
assessment in which such failure occurs and for the 2 years of assessment
following shall be computed on such basis as the Commissioner in his discretion
thinks fit.
(3) Subject to section 18C, where a person commences to carry on a
trade, profession or business in Hong Kong on a day within a year of
assessment, the assessable profits from that source for such year of assessment
shall be computed on the amount of the profits therefrom arising in or derived
from Hong Kong during the period beginning on the date of commencement
and ending on the last day of that year of assessment. (Amended 7 of 1975
S. 11)
(4) Where a person has commenced to carry on a trade, profession
or business in Hong Kong on a day within the year preceding a year of
assessment, the assessable profits from that source for that year of assessment
shall be computed on the amount of the profits therefrom arising in or derived
from Hong Kong for 1 year from such day:
Provided that such person may claim, by giving notice in writing to the
Commissioner, to have the assessable profits from the source for that year of
assessment and for the following year of assessment (but not for one or other of
those years) recomputed on the basis of the actual profits therefrom arising in
or derived from Hong Kong during each such year respectively, but where the
commencement is in the year of assessment commencing on 1 April 1973, such
claim for recomputation shall relate only to the year of assessment commencing
onlAprill974. (Amended7of]975s.11)
(5) Where a person ceases to carry on a trade, profession or business in
Hong Kong the assessable profits from that source for the year of assessment in
which the cessation occurs shall be computed on the amount of the profits
therefrom arising in or derived from Hong Kong during the period beginning
on 1 April in that year and ending on the date of cessation:
Provided that where the profits arising in or derived from Hong Kong
from that source during the year of assessment immediately preceding the year
in which the cessation occurs exceed what would otherwise have been the
assessable profits from that source for that preceding year such assessable





profits shall be recomputed on the basis of the actual profits therefrom arising
in or derived from Hong Kong during that preceding year and an additional
assessment shall be made accordingly.
(6) Notwithstanding the provisions of section 70 a claim made for an
adjustment of any assessment because of a change in the basis period required
or authorized under the provisions of this section shall be entertained if it is
made in writing within 2 years after the end of the relevant year of assessment
or, where the claim has been made under the proviso to subsection (4), within
2 years after the end of the second of the 2 years of assessment referred to in
such proviso. A claim so made shall be regarded as an objection to an
assessment under section 64 for the purposes of Part Xl. (Amended 35 of
1965s.11)
(7) This section shall apply to the years of assessment up to and including
the year of assessment commencing on 1 April 1974. (Replaced 7 of 1975
S. 11)
(Replaced 49 of 1956 s. 14. Amended 7 of 1986 s. 12)

18A. Assessable profits for the year
of assessment 197415

(1) Where the assessable profits for the year of assessment commencing
on 1 April 1974 from any trade, profession or business fall to be computed
under section 18(1) but the actual profits from that source for that year of
assessment exceed those assessable profits as so computed, then, not-
withstanding section 18, the assessable profits for the year of assessment
commencing on 1 April 1974 shall be computed on the basis of those actual
profits.
(2) Where the assessable profits for the year of assessment commencing
on 1 April 1974 from any trade, profession or business fall to be computed
under section 18(2) on the amount of profits from that source for the year
ending on a day other than 31 March in the year preceding that year of
assessment but the actual profits from that source-
(a)for the year ending on the corresponding day in the year of
assessment; or
(b)if the accounts for that trade, profession or business were made
up to more than 1 day in the year of assessment, for the year
ending on such of those days as the Commissioner may direct,
exceed those assessable profits as so computed, then, notwithstanding section
18, the assessable profits for the year of assessment commencing on 1 April
1974 shall be computed on the basis of those actual profits.
(3) Where the assessable profits for the year of assessment commencing
on 1 April 1974 from any trade, profession or business fall to be computed
under section 18(4) but the lesser of the actual profits from that source for-





(a)the year ending on the day in that year of assessment to which the
accounts of that trade, profession or business were made up; or
(b) that year of assessment,
exceed those assessable profits as so computed, then notwithstanding section
18, the assessable profits for the year of assessment commencing on 1 April
1974 shall be computed on the basis of those actual profits.
(4) For the purposes of applying this section there shall be disregarded
any loss brought forward to the year of assessment commencing on 1 April
1974 under section 19(2).
(Added 7 of 1975 s. 12)

of assessment commencing on 1 April 1975

(1) Subject to subsection (2) and to sections 18C, 18D and 18E, the
assessable profits for any year of assessment commencing on or after 1 April
1975 from any trade, profession or business carried on in Hong Kong shall be
computed on the full amount of the profits therefrom arising in or derived from
Hong Kong during the year of assessment.
(2) Subject to sections 18C, 18D and 18E, where the Commissioner is
satisfied that the accounts of a trade, profession or business carried on in Hong
Kong are made up to some day other than 31 March, he may direct that the
assessable profits from that source for any year of assessment be computed on
the full amount of profits therefrom arising in or derived from Hong Kong
during the year ending on that day in the year of assessment.
(Added 7 of 1975 s. 12. Amended 7 of 1986 s. 12)

years of assessment commencing
on or after 1 April 1974

(1) Subject to subsection (2) where a person commences to carry on a
trade, profession or business in Hong Kong within any year of assessment
commencing on or after 1 April 1974 and the Commissioner is satisfied that the
first accounts of such trade, profession or business after its commencement are
made up to some day other than 31 March, the assessable profits from that
source for that year of assessment shall-
(a)if the first accounts are made up to a day within that year of
assessment, be computed on the full amount of the profits from
that source arising in or derived from Hong Kong during the
period beginning on the day of commencement and ending on the
day to which the accounts are made up; or
(b)if the first accounts are for a period in excess of a year and are
made up to a day within a year of assessment following that in





which the commencement occurred, be computed on such basis
as the Commissioner thinks fit. (Amended 7 of 1986 s. 12)
(2) Where the first accounts of a trade, profession or business commenced in
any year of assessment commencing on or after 1 April 1974 are for a period of 1
year or less and are made up to a day within the year of assessment following that
in which the commencement occurred, there shall be deemed to be no assessable
profits for the year of assessment in which the commencement occurred.
(Added 7 of 1975 s. 12)

commencing on 1 April 1975

(1) Save as provided in this section, where, in any year of assessment
commencing on or after 1 April 1975, a person ceases to carry on a trade,
profession or business in Hong Kong, the assessable profits from that source for
the year of assessment in which the cessation occurs shall be computed on the
amount of the profits therefrom arising in or derived from Hong Kong during
the period beginning on the day following the end of the basis period for the year
preceding the year of assessment and ending on the date of cessation.
(2) Where in any year of assessment commencing on or after 1 April 1975
a person ceases to carry on a trade, profession or business in Hong Kong which
was commenced by him in Hong Kong before 1 April 1974, the assessable
profits from that source for the year of assessment in which the cessation occurs
shall be computed on the amount of the profits therefrom arising in or derived
from Hong Kong during the period beginning on 1 April in that year and
ending on the date of cessation:
Provided that where a person ceases to carry on such trade, profession or
business in Hong Kong other than by reason of the death of an individual
previously carrying on a trade, profession or business as the sole proprietor
thereof, and the trade, profession or business, or any part thereof, is transferred
to or carried on by any other person as his trade, profession or business, this
subsection shall not apply, but the cessation shall, subject to subsection (3), be
deemed to be a cessation for the purposes of subsection (1). (Amended 71 of
1983s.16)
(2A) Where a person ceases to carry on a relevant trade, profession or
business on or after 1 April 1979, the following amount shall be treated as
assessable profits therefrom for the year of assessment in which the cessation
occurs and shall be in addition to the assessable profits therefrom which, apart
from this subsection, fall to be computed for that year of assessment-
(a)in the case of an excepted trade, profession or business, the
amount, if any, by which the relevant profits therefrom arising in
or derived from Hong Kong during the relevant period exceed
the transitional amount;





(b)in the case of any other relevant trade, profession or business, the
full amount of any relevant profits therefrom arising in or derived
from Hong Kong during the relevant period,
and, for the purposes of this subsection, profits are 'relevant profits' if, but for
subsection (2) and apart from Part VI, the assessable profits for that year of
assessment would have included those profits, and-
'excepted trade, profession or business' means a relevant trade, profession or
business referred to in the definition in this subsection of 'transitional
amount';
'relevant period' means the period beginning on the day next following the end
of the basis period for the year preceding the year of assessment in which
the cessation occurs and ending on 31 March in the year preceding the year
of assessment in which the cessation occurs;
'relevant trade, profession or business' means a trade, profession or business to
which subsection (2) applies and in the case of which the basis period for
the year preceding the year of assessment in which the cessation occurs
ends on a day other than 31 March;
'transitional amount' means-
(a)where the assessable profits from a relevant trade, profession
or business for the year of assessment commencing on 1 April
1974 fell to be computed under section 18(2) on the amount
of profits therefrom for the year ending on a day other than
31 March in the year preceding that year of assessment, the
amount of profits from the relevant trade, profession or
business arising in or derived from Hong Kong during the
period beginning on the day next following the corres-
ponding day in that year of assessment and ending on 31
March 1975;
(b)where the assessable profits from a relevant trade, profession or
business for the year of assessment commencing on 1 April 1974
fell to be computed under section 18A(2), the amount of profits
from the relevant trade, profession or business arising in or
derived from Hong Kong during the period beginning on the day
next following the end of the basis period for that year of
assessment and ending on 31 March 1975,
and where a loss was incurred in the carrying on of a relevant trade,
profession or business referred to in paragraph (a) or (b) of this definition
during the period therein referred to, 'transitional amounC, in relation to
that trade, profession or business, shall be construed to mean a nil amount.
(Added34 of 1980 s. 2)
(3) Where in the year of assessment commencing on 1 April 1975 a person
ceases to carry on a trade, profession or business in Hong Kong which was
commenced by him in Hong Kong before 1 April 1974 and-





(a)subsection (2) does not apply by virtue of the proviso thereto;
and
(b)the assessable profits for the year of assessment commencing on
1 April 1974 have not been computed under section 18A(I) or (2);
and
(c)the basis period for the year of assessment commencing on
1 April 1974 ended within the year of assessment commencing on
1 April 1973,
then the assessable profits for the year of assessment commencing on 1 April
1975 shall be computed on the amount of the profits arising in or derived from
Hong Kong during the period beginning 1 year after the end of the basis period
for the year of assessment commencing on 1 April 1974 and ending on the date
of cessation.
(4) Notwithstanding anything in this Ordinance to the contrary, where, in
the year of assessment commencing on 1 April 1975, a person ceases to carry on
a trade, profession or business in Hong Kong which was commenced by him in
Hong Kong in the year of assessment commencing on 1 April 1973-
(a)the assessable profits for the year of assessment commencing on
1 April 1974 shall be recomputed on the basis of the actual
profits arising in or derived from Hong Kong during such year;
and
(b)the assessable profits for the year of assessment commencing on
1 April 1975 shall be computed on the amount of the profits
therefrom arising in or derived from Hong Kong during the
period beginning on 1 April 1975 and ending on the date of
cessation.
(5) Where a person who commenced to carry on a trade, profession or
business in Hong Kong in a year of assessment commencing on or after 1 April
1975-
(a)ceases to carry on such trade, profession or business in the year
of assessment following that in which such commencement
occurred; and
(b)by virtue of section 18Q2), there has been deemed to be no
assessable profits for the year of assessment in which the
commencement occurred,
the assessable profits for the year of assessment in which the cessation occurs
shall be recomputed on the basis of the actual profits arising in or derived from
Hong Kong from the date of the commencement to the date of cessation.
(6) Notwithstanding section 70, where a person ceases to carry on a
trade, profession or business in the circumstances described in subsection (4), a
claim made by that person for an adjustment of any assessment in accordance
with that subsection shall be entertained if it is made in writing within 2 years
after the end of the year of assessment commencing on 1 April 1975.





(7) A claim made under subsection'(6) shall be regarded as an objection
to an assessment under section 64 for the purposes of Part Xl.
(Added 7 of 1975 s. 12. Amended 7 of 1986 s. 12)

18E. Change of accounting date and apportionments

(1) Where the assessable profits of a person from any trade, profession or
business carried on in Hong Kong have been computed by reference to an
account made up to a certain day in any year of assessment and either-
(Amended 7 of 1986 s. 12)
(a)that person fails to make up an account to the corresponding day
in the following year of assessment; or
(b)that person makes up accounts to more than one day in the
following year of assessment,
then-
(i) the assessable profits from that source for the year of assessment
in which the circumstances described in either paragraph (a) or (b)
prevail shall be computed on such basis as the Commissioner
thinks fit; and
(ii)the assessable profits for the year preceding that year of
assessment shall be recomputed on such basis as the
Commissioner thinks fit.
(2) For the purposes of subsection (1)-
(a)where the accounts of any trade, profession or business are made
up to the end of the Lunar year, the Commissioner may accept
those accounts as being made up to a corresponding day in each
year of assessment; and
(b)in the case of a trade, profession or business which was
commenced on or after 1 April 1974, the Commissioner may, if
he considers it necessary, make a computation under subsection
(1) in respect of a basis period which exceeds 12 months.
(3) For the purposes of this Part, where in the case of a trade, profession
or business it is necessary in order to arrive at the assessable profits or the losses
for any year of assessment to divide or apportion to specific periods the profits
and losses for any period for which accounts have been made up, or to
aggregate any such profits or losses or any apportioned parts thereof, it shall be
lawful to make such division and apportionment or aggregation, and any such
apportionment shall be made in proportion to the number of days or months in
the respective periods unless the Commissioner, having regard to any special
circumstances, otherwise directs.
(4) For the purposes of section 18D(2A), where in the case of a trade,
profession or business it is necessary in order to arrive at the profits or losses for
any period to divide or apportion to specific periods the profits and losses for





any period for which accounts have been made up, or to aggregate any such
profits or losses or any apportioned parts thereof, the Commissioner may make
such division and apportionment or aggregation as he may deem proper in that
case. (Added34 of 1980s. 3)
(Added 7 of 1975 s. 12)

18F. Adjustment of assessable profits

(1) The amount of assessable profits for any year of assessment of a
person chargeable to tax under this Part shall be increased by the amount of
any balancing charge directed to be made on that person under Part VI and
decreased by the allowances made to that person under Part VI for that year of
assessment to the extent to which the relevant assets are used in the production
of the assessable profits.
(2) When in any year of assessment the amount of the allowances made
under Part VI to any person chargeable to tax under this Part exceeds the total
amount of that person's assessable profits, as increased by any balancing
charge, the amount of such excess shall, for the purposes of section 19C, be
deemed to be a loss of that person for that year of assessment.
(3) This section shall apply to the year of assessment commencing on 1
April 1975 and to subsequent years of assessment.
(Added 7 of 1975 s. 12)

19. Treatment of losses

(1) Subject to the provisions of subsection (3) where a loss is incurred in
any year of assessment up to and including the year of assessment commencing
on 1 April 1974 by a person chargeable to tax under this Part the amount of
such loss attributable to activities in Hong Kong shall notwithstanding the
provisions of section 70 be set off against what would otherwise have been the
assessable profits of such person for that year of assessment. (Amended 49 of
1956 s. 15; 7 of 1975 s. 13; 7 of 1986 s. 12)
(2) Where the amount of loss which may set off under subsection (1) is
such that it cannot be wholly set off against the assessable profits of a person
chargeable to tax under this Part for the year of assessment in which the loss
occurred, the amount not so set ofr shall be carried forward and shall be set off
against what would otherwise have been assessable profits of that person for the
future years of assessment in succession:
Provided that-
(a) the amount of any such loss allowed to be set ofr in computing
the assessable profits for any year of assessment shall not be set





off in computing the assessable profits for any other year of
assessment; and
(b)where a loss is set off under this subsection in respect of the year
of assessment commencing on 1 April 1975 or any subsequent
year of assessment, that loss shall be set off before the set ofr of
any loss under section 19C. (Replaced 7 of 1975 s. 13)
(3) For the avoidance of doubt, it is hereby declared that losses incurred
during the basis period for any year of assessment prior to that commencing on
1 April 1955, shall be ascertained and treated in accordance with the relevant
provisions of this Ordinance in force on 31 March 1955.
(4) Notwithstanding anything in subsection (3), where a loss is sustained
in respect of the basis period for the year of assessment commencing on 1 April
1955, such part of such loss as is attributable to that portion (including the
whole) of the basis period which is prior to 1 April 1955, shall for the purposes
of this section be deemed to have been sustained during the said year of
assessment.
(Replaced 36 of 1955 s. 28)

19A. Computation of losses

(1) For the purposes of section 19, the amount of a loss incurred by a
person chargeable to tax under this Part shall, subject to the provisions of
subsection (2) of this section, be computed in a like manner as assessable profits
are computed.
(2) Where the assessable profits of a person chargeable to tax under this
Part are computed in accordance with section 18(2) by reference to accounts for
a period ending on some day other than 31 March in the year prior to the year
of assessment, any loss which may be set off under the provisions of section 19
shall be computed by reference to such person's accounts for a similar period
ending on the same day in the year of assessment, and the loss so computed
shall be deemed to be the loss incurred by such person in that year of
assessment.
(3) Where a person commences to carry on a trade, profession or business
in Hong Kong within the year of assessment commencing on 1 April 1974, any
loss incurred by that person in that year of assessment shall be computed by
reference to such person's accounts for a similar period as that person's
assessable profits would have been computed under section 18C. (Added 7 of
1975 s. 14. Amended 7 of 1986 s. 12)
(4) Subsections (1) and (2) shall apply to the years of assessment up to
and including the year of assessment commencing on 1 April 1974. (Added 7
of 1975 s. 14)
(Added 49 of 1956 s. 16)





19B. Approved charitable donations

(1) Subject to subsection (2), a person chargeable to tax under this Part
may deduct the aggregate of approved charitable donations made by that
person in the basis period for a year of assessment, if such aggregate is not less
than $100, from what would otherwise have been the assessable profits of such
person for that year of assessment after first giving effect, where appropriate, to
section 19.
(2) A person shall not be entitled under subsection (1) to deduct for any
year of assessment-
(a)any sum which is allowable as a deduction under section 16, 16B
or l6Q
(b)a sum exceeding 10% of the assessable profits of that person for
that year.
(3) This section shall apply to the year of assessment up to and including
the year of assessment commencing on 1 April 1974. (Added7of]975s.15)
(Added 65 of 1970 s. 5)

19C. Treatment of losses after 1 April 1975

(1) Where in any year of assessment-
(a)an individual sustains a loss in any trade, profession or business
carried on by him; and
(b) the individual or, in the case of a husband and wife, npt being a
wife living apart from her husband, the husband does not elect
for personal assessment under section 41 or is not deemed to
have elected to be personally assessed for that year of
assessment,
the amount of that loss shall be carried forward and set off against the amount
of his assessable profits from that trade, profession or business for subsequent
years of assessment. (Amended 71 of 1983 s. 17)
(2) Where in any year of assessment-
(a)an individual incurs a share of a loss of a partnership in any
trade, profession or business carried on by that partnership; and
(b) the individual or, in the case of a husband and wife, tickt being a
wife living apart from her husband, the husband does not elect
for personal assessment under section 41 or is not deemed to have
elected to be personally assessed for that year of assessment,
the amount of that share of the loss shall be carried forward and set ofF against
the amount of his share of assessable profits of the partnership from that trade,
profession or business for subsequent years of assessment: (Amended 71 of
1983s.17)





Provided that where at the end of the year of assessment commencing on
1 April 1983 a share of a loss to be carried forward under this subsection is one
that was incurred by a husband and wife, not being a wife living apart from her
husband, in partnership with each other, whether or not also with other persons-
(i) the share of the loss shall be deemed to be apportioned between
the husband and wife in the proportions in which they were
entitled to share profits between themselves as at the last day of
the basis period for that year of assessment; and
(ii) each such portion of the share of the loss shall be carried forward
and set off against the husband's or, as the case may be, the wife's
respective share of assessable profits of the partnership from that
trade, profession or business for subsequent years of assessment.
(Added 71 of 1983 s. 17)
(3) Where in any year of assessment an individual has sustained a loss or
has incurred a share of a loss of a partnership and-
(a) is personally assessed under Part VII; or
(b)in the case of a wife, not being a wife living apart from her
husband, the husband is personally assessed under Part VII;
the amount of the loss or share of the loss shall be dealt with in accordance with
that Part. (Replaced 71 of 1983 s. 17)
(4) Where in any year of assessment a corporation or a person, who is not
an individual, a partnership or a corporation, carrying on a trade, profession or
business sustains a loss in that trade, profession or business, the amount of that
loss shall be set off against the assessable profits of the corporation or person
(including its share of the assessable profits of a partnership in which it is a
partner) for that year of assessment and to the extent not so set off, shall be
carried forward and set off against the corporation's or the person's assessable
profits and its share of assessable profits of such a partnership for subsequent
years of assessment.
(5) Where-
(a)a trade, profession or business is carried on in Hong Kong by
persons in partnership and any one of those persons is a
corporation or is a person who is not an individual, a partnership
or a corporation; and (Amended 7 of 1986 s. 12)
(b)in any year of assessment a loss 'is incurred in that trade,
profession or business,
then the corporation's or the person's share of that loss shall be set off against
the assessable profits of the corporation or the person for the year of assessment
in which the loss was incurred and to the extent not so set off, be carried
forward and, for subsequent years of assessment, be set off first against the
corporation's or the person's share of the assessable profits of such partnership
and, to the extent not so set ofr, then against the assessable profits of the
corporation or the person.





(6) For the purposes of this section-
(a)the amount of any loss set off in computing the assessable profits
for any year of assessment shall not be set off in computing the
assessable profits for any other year of assessment;
(b)the amount of any loss carried forward to any year of assessment
to be set off against the assessable profits for that year shall not
be set off more than once in that year of assessment;
(c)the total amount set off against assessable profits shall not exceed
the amount of the loss;
(d)the amount of any loss to be set off under this section shall be the
loss attributable to activities in Hong Kong; (Amended 7 of
1986s.12)
(e)the amount of any loss sustained in any trade, profession or busi-
ness carried on for the benefit of a trust by a person in his capacity
as trustee shall not be available for set off except against the assess-
able profits of that trust from that trade, profession or business for
subsequent years of assessment. (Added30of]98]s.4)
(7) For the purposes of this section-
(a)'partnership' does not include a partnership (other than a
partnership referred to in section 345(2) of the Companies
Ordinance (Cap. 32)) consisting at any time in the year of
assessment of more than 20 partners;
(b)in calculating the number of partners in a partnership, there shall
be included every partner in any other partnership which is itself
a partner in the first-mentioned partnership. (Replaced 51 of
1978s.9)
(8) This section shall apply to the year of assessment commencing on 1
April 1975 and to subsequent years of assessment.
(Added 7 of 1975 s. 16)

19D. Computation of losses after 1 April 1975
(1) For the purposes of section 19C, the amount of loss incurred by a
person chargeable to tax under this Part for any year of assessment shall be
computed in like manner and for such basis period as the assessable profits for
that year of assessment would have been computed.
(2) This section shall apply to the year of assessment commencing on 1
April 1975 and to subsequent years of assessment.
(Added 7 of 1975 s. 16)

19E. Adjustment of losses
(1) For the purposes of section 19D, the amount of loss for any year of
assessment of any person chargeable to tax under this Part shall be increased by





the allowances made to that person under Part VI for that year of assessment to
the extent to which the relevant assets are used in the production of the losses
and decreased by the amount of any balancing charge directed to be made on
that person under Part VI.
(2) Where in any year of assessment the amount of the balancing charge
made under Part VI to a person chargeable to tax under this Part exceeds the
total amount of that person's losses, as increased by any allowances, the
amount of such excess shall be deemed to be assessable profits of that person
for that year of assessment.
(3) This section shall apply to the year of assessment commencing on 1
April 1975 and to subsequent years of assessment.
(Added 7 of 1975 s. 16)

20. Liability of certain non-resident persons

(1) For the purposes of this section-
(a)a person is closely connected with another person where the
Commissioner in his discretion considers that such persons are
substantially identical or that the ultimate controlling interest of
each is owned or deemed under this section to be owned by the
same person or persons;
(b)the controlling interest of a company shall be deemed to be
owned by the beneficial owners of its shares, whether held
directly or through nominees, and shares in one company held by
or on behalf of another company shall be deemed to be held by
the shareholders of the last-mentioned company.
(2) Where a non-resident person carries on business with a resident
person with whom he is closely connected and the course of such business is so
arranged that it produces to the resident person either no profits which arise in
or derive from Hong Kong or less than the ordinary profits which might be
expected to arise in or derive from Hong Kong, the business done by the
non-resident person in pursuance of his connection with the resident person
shall be deemed to be carried on in Hong Kong, and such non-resident person
shall be assessable and chargeable with tax in respect of his profits from such
business in the name of the resident person as if the resident person were his
agent, and all the provisions of this Ordinance shall apply accordingly.
(Amended 36 of 1955 s. 29; 7 of 1986 s. 12)

20A. Persons chargeable on behalf of a non-resident

(1) A non-resident person shall be chargeable to tax either directly or in
the name of his agent in respect of all his profits arising in or derived from
Hong Kong from any trade, profession or business carried on in Hong Kong





whether such agent has the receipt of the profits or not, and the tax so charged
whether directly or in the name of the agent shall be recoverable by all means
provided in this Ordinance out of the assets of the non-resident person or
from the agent. Where there are more agents than one they may be charged to
tax jointly or severally in respect of the profits of the non-resident person and
shall be jointly and severally liable for the tax thereon. (Amended 7 of 1986
s. 12)
(2) Every person chargeable to tax as agent, or from whom tax is
recoverable in respect of the profits of another person, shall retain out of any
assets coming into his possession or control on behalf of such other person or in
his capacity as agent so much thereof as shall be sufficient to produce the
amount of such tax, and he shall be and is hereby indemnified against any
person whomsoever in respect of his retention of such assets.
(3) Notwithstanding anything contained in subsections (1) and (2), any
person who sells any goods in Hong Kong on behalf of a non-resident person
shall furnish quarterly to the Commissioner a return showing the gross
proceeds from such sales and shall at the same time pay to the Commissioner a
sum equal to 1 % of such proceeds or such lesser sum as may have been agreed
with the Commissioner. On receipt of such sum the Commissioner shall issue a
certificate in the form specified by the Board of Inland Revenue: (Amended 39
of 1969 s. 3; 7 of 1986 s. 12)
Provided that the Commissioner may exempt any such person from the
provisions of this subsection on such conditions as he may consider fit.
(Added 49 of 1956 s. 17)

20B. Persons chargeable in respect of
certain profits of a non-resident

(1) Without prejudice to section 20A, this section applies in respect of a
non-resident person who is chargeable to tax in respect of-
(a)sums deemed by virtue of section 15(1)(a) or (b) to be receipts
arising in or derived from Hong Kong from a trade, profession or
business carried on in Hong Kong; or
(b)sums received in respect of, or which in any way derive directly
or indirectly from, the performance in Hong Kong by a
non-resident entertainer or sportsman (whether or not he is the
non-resident person who is so chargeable) of an activity in his
character as entertainer or sportsman on or in connection with a
commercial occasion or event, including------
(i)any appearance of the entertainer or sportsman by way of or
in connection with the promotion of any such occasion or
event; and





(ii) any participation by the entertainer or sportsman in or
for sound recording, films, videos, radio, television or other
similar transmissions (whether live or recorded).
(2) Where this section applies, the non-resident person is chargeable
to tax in respect of the sums described in subsection (1) in the name of any
person in Hong Kong who paid or credited those sums to that or any other
non-resident person, and the tax so charged shall be recoverable by all
means provided in this Ordinance from that person in Hong Kong.
(3) Where a person in Hong Kong from whom tax is recoverable by
virtue of this section pays or credits to a non-resident person (whether or not
he is the non-resident person who is chargeable to tax) sums described in
subsection (1) he shall, at the time he makes the payment or credit, deduct from
those sums so much thereof as is sufficient to produce the amount of such tax,
and he is hereby indemnified against any person in respect of his deduction of
such sum.
(4) In this section-
~1entertainer or sportsman' means a person, other than a corporation, who
gives performances (whether alone or with others) in his character as
entertainer or sportsman in any kind of entertainment or sport, including
any activity of a physical kind which (whether in a live or recorded form)
the public or any section of the public is or may be permitted (whether for
payment or not) to see or hear;
'commercial occasion or evenC includes any description of occasion or event-
(a)for which an entertainer or sportsman (or other person) might,
by virtue of his performance of the activity, receive or become
entitled to receive anything by way of cash or any other form of
property; or
(b)which is designed to promote commercial sales or activity by
advertising, the endorsement of goods or services, sponsorship,
or other promotional means of any kind.
(Added 4 of 1989 s. 2)

21. Assessable profits of certain businesses to he
computed on a percentage of the turnover

Where the true amount of the assessable profits arising in or derived
from Hong Kong of a non-resident person in respect of a trade, profession
or business carried on in Hong Kong cannot be readily ascertained, such
assessable profits may be computed on a fair percentage of the turnover of that
trade or business in Hong Kong.
(Amended 36 of 1955 s. 30; 7 of 1975 s. 17; 7 of 1986 s. 12)





from cinematograph films,
patents, trademarks, etc.

The assessable profits of a person arising in or derived from Hong Kong in
respect of a sum deemed by section 15(1)(a) or (b) to be a receipt arising in or
derived from Hong Kong from a trade, profession or business carried on in
Hong Kong shall, for the purposes of this Ordinance and notwithstanding any
other provisions of this Part, be taken to be 10% of such sum.
(Added2of]97]s.14. Amended7of]975s. 18; 7of 1986s. 12)

22. Assessment of partnerships

(1) Where a trade, profession or business is carried on by 2 or more
persons jointly the assessable profits therefrom shall be computed in one sum
and the tax in respect thereof shall be charged in the partnership name.
(Replaced 36 of 1955 s. 31)
(2) The precedent partner shall make and deliver a statement of the
profits or losses of such trade, profession or business, on behalf of the
partnership, ascertained in accordance with the provisions of this Part relating
to the ascertainment of profits. Where no active partner is resident in Hong
Kong the return shall be furnished by the manager or agent of the partnership
in Hong Kong. (Amended 7 of 1986 s. 12)
(3) If a change occurs in a partnership of persons carrying on any trade,
profession or business, by reason of retirement or death, or the dissolution of
the partnership as to one or more of the partners, or the admission of a new
partner, in such circumstances that one or more of the persons who until that
time were engaged in the trade, profession or business continue to be engaged
therein, or if a person previously engaged in any trade, profession or business
on his own account continues to be engaged in it, but as a partner in a
partnership, the tax payable by the person or persons who carry on the trade,
profession or business after that time shall, notwithstanding the change be
computed on what would otherwise have been the assessable profits of such
person or persons or the aggregation of such assessable profits as if no such
change had occurred: (Amended 30 of 1950 Schedule; 36 of 1955 s. 31; 49 of
1956 s. 18; 7 of 1975 s. 19)
Provided that on application made in writing by all the persons engaged in
the trade, profession or business which was commenced before 1 April 1975
both immediately before and immediately after the change, and signed by all of
them or, in the case of a deceased person, by his legal representative, and
received by the assessor within 2 years after the change took place, the assessor
shall compute the profits for any year of assessment up to and including the
year commencing on 1 April 1974 as if the trade, profession or business had





been discontinued at the date of the change and a new trade, profession or
business had been then set up and commenced. (Amended 30 of 1950
Schedule; 49 of 1956 s. 18; 7 of 1975 s. 19)
(4) Tax upon the partnership shall be recoverable by all means provided
in this Ordinance out of the assets of the partnership, or from any partner.
(Amended 36 of 1955 s. 31)
(5) Tax may be assessed on the profits of a partnership notwithstanding
the cessation or dissolution of such partnership and shall be recoverable from
the former partners and from the assets of the partnership at the time of its
cessation.

profits or losses

(1) In order to ascertain the share of a partner of the assessable profits or
losses of a partnership, such assessable profits or losses for the relevant year of
assessment shall be apportioned amongst the persons who were partners during
the basis period in the ratio in which the profits or losses of the basis period for
that year of assessment were divided; and the profits or losses as so apportioned
shall constitute the shares of the assessable profits and losses of the individual
partners for that year of assessment.
(2) For the purposes of subsection (1), there shall be excluded from the
assessable profits of a partnership any loss brought forward under section
19C.
(3) For the purposes of this section-
(a)'partnership' does not include a partnership (other than a
partnership referred to in section 345(2) of the Companies
Ordinance (Cap. 32)) consisting at any time in the year of
assessment of more than 20 partners;
(b)in calculating the number of partners in a partnership, there shall
be included every partner in any other partnership which is itself
a partner in the first-mentioned partnership. (Replaced 51 of
1978s.9)
(Added 7 of 1975 s. 20)

23. Ascertainment of assessable profits
of Nfe insurance corporations

(1) The assessable prQfits for any year of assessment of a corporation,
whether mutual or proprietary, from the business of life insurance, shall-
(a)be deemed to be 5% of the premiums from life insurance business
in Hong Kong of the corporation during the basis period for that
year; or(Amended 7 of 1986 s. 12)





(b)should the corporation so elect, be that part of the adjusted
surplus ascertained in accordance with the provisions of
subsections (2) to (7) deemed to arise in the basis period for that
year less any dividend received which is required to be excluded
by virtue of section 26(a): (Amended 49 of 1956 s. 19)
Provided that-
(i) any such election once made shall be irrevocable and in
addition shall be deemed to apply to all future years of
assessment;and (Added49of]956s.19)
(ii) until such part of the adjusted surplus is ascertained, the
assessable profits shall be calculated provisionally in
accordance with paragraph (a) of this subsection, and tax
charged and collected as if no such election had been made.
(Amended 49 of 1956 s. 19)
(2) A corporation which elects to be assessed in the manner provided in
subsection (1)(b) shall submit to the Commissioner a certified true copy of the
latest abstract of the report of the actuary submitted to the Insurance Authority
under section 18 of the Insurance Companies Ordinance (Cap. 41) or, in the
case of a corporation to which section 52(3) of that Ordinance applies, a copy
of the latest such abstract submitted under that section. (Replaced 11 of 1985
s.2)
(3) Any election under subsection (1)(b) shall be effective only if the
actuarial report is submitted not later than 2 years after the end of the period in
respect of which it is made. Where an effective election has been made it shall be
lawful to give effect to such election notwithstanding the provisions of section
70. (Amended 49 of 1956 s. 19)
(4) (a) The surplus shall be the amount by which the life insurance fund
exceeds the estimated liability of the corporation on the life
insurance fund at the end of the period in respect of which any
actuarial report is made.
(b) The adjusted surplus shall be ascertained by adding to the
surplus-
(i) any deficit in respect of a period prior to the period in
respect of which the relevant actuarial report is made where
such deficit is included in such report;
(ii) any outgoing or expense charged against the life insurance
fund in the relevant actuarial report which is not such that it
would be allowed as a deduction in ascertaining assessable
profits under the provisions of section 16;
(iii) any expense disbursement or loss charged against the life
insurance fund in the relevant actuarial report which is such
that it would not be allowed as a deduction in ascertaining
assessable profits by reason of the provisions of section 17;





(iv) any income or profits of the corporation arising in the period
in respect of which the relevant actuarial report is made, not
being profits from the business of insurance other than fife
insurance, and not credited to the life insurance fund in such
report;
(v) any appropriations of profits or transfers to reserve charged
against the fund during the period in respect of which the
relevant actuarial report is made, other than appropriations
or transfers to policy holders in their capacity as such;
(va)the amount of a balancing charge directed to be made under
Part VI, (Added 7 of 1975 s. 21)
and by deducting therefrom-
(vi) any surplus disclosed by a previous actuarial report which
has been retained in the life insurance fund in the relevant
actuarial report;
(vii)any transfer or appropriation to policy holders in their
capacity as such, effected during the period in respect of
which the relevant actuarial report is made where such
transfer or appropriation has not been charged against the
life insurance fund in such report;
(viii) any outgoing or expenses not charged against the life
insurance fund during the period in respect of which the
relevant actuarial report is made which is such that it would
be deducted in ascertaining assessable profits under the
provisions of section 16;
(ix) any receipt of a capital nature, or transfer from reserve,
credited to the life insurance fund during the period in
respect of which the relevant actuarial report is made;
(x) the allowances provided by Part VI to the extent to which
the relevant assets are used in the production of the adjusted
surplus. (Added 7 of 1975 s. 21)
(5) Notwithstanding anything contained in subsection (4) the adjusted
surplus of a corporation which transacts life insurance business both within
Hong Kong and elsewhere shall be the adjusted surplus ascertained in
accordance with the provisions of the said subsection (4) less that portion of
such adjusted surplus as is not deemed under the provisions of subsection (6) to
be profits arising in or derived from Hong Kong. (Amended 7 of 1986 s. 12)
(6) Where a corporation transacts life insurance business both within
Hong Kong and elsewhere, the portion of the adjusted surplus ascertained in
accordance with the provisions of subsection (4) which shall be deemed to be
profits arising in or derived from Hong Kong is the amount which bears the
same proportion to the adjusted surplus so ascertained as the aggregate of the
premiums from life insurance business in Hong Kong for the period of the





relevant actuarial report bears to the aggregate of the premiums from the whole
of the corporations life insurance business for that period. (Amended 7 of
1986s.12)
(7) Any adjusted surplus ascertained in accordance with the foregoing
provisions shall be deemed to arise during the years or other periods which
make up the period in respect of which the relevant actuarial report is made in
the proportion which the aggregate of the premiums from life insurance
business in Hong Kong in each such period bears to the aggregate of such
premiums for the total period in respect of which the relevant actuarial report is
made. (Amended 49 of 1956 s. 19; 7 of 1986 s. 12)
(8) (a)Where the making of the adjustments required by subsection (4)
results in a deficit, such deficit shall be deemed to be the loss
sustained by the corporation during the period in respect of
which the relevant actuarial report is made.
(b)In ascertaining for the purposes of sections 19 and 19C what part
of such loss so calculated is attributable to activities in Hong
Kong the provisions of subsections (5) and (6) shall apply mutatis
mutandis. (Amended 11 of 1985 s. 2)
(c)Any such loss attributable to activities in Hong Kong shall be
deemed to have been sustained during the years which make up
the period in respect of which the relevant actuarial report is
made in the proportion which the aggregate of the premiums
from life insurance business in Hong Kong in each such year
bears to the aggregate of such premiums for the total period
in respect of which the relevant actuarial report is made.
(Amended 49 of 1956 s. 19; 7 of 1986 s. 12)
(9) In this section---
,,actuarial report' means any abstract referred to in subsection (2); (Added 11
of 1985 s. 2)
'life insurance business' means business of the following classes as specified in
Part 2 of Schedule 1 to the Insurance Companies Ordinance (Cap. 41)-
A Life and annuity;
B Marriage and birth;
C Linked long term;
E Tontines,
and references to a 9ife insurance fund' shall be construed accordingly;
(Replaced 11 of 1985 s. 2)
'premiums from life insurance business in Hong KonJ includes-
(a)all premiums received or receivable in Hong Kong from both
residents and non-residents; and
(b)all premiums receivable outside Hong Kong from residents of Hong
Kong where such premiums are in respect of policies the proposals
for which were received by the corporation in Hong Kong:





Provided that any such premiums returned to the insured and any
corresponding premiums paid on reinsurance shall be deducted from the
premiums so receivable. (Amended 7 of 1986 s. 12)
(Replaced 36 of 1955 s. 32)

insurance corporations other than
life insurance corporations

(1) The assessable profits of a corporation, whether mutual or
proprietary, from the business of insurance other than life insurance, shall be
ascertained by taking the gross premiums from such insurance business in
Hong Kong less any such premiums returned to the insured and any premiums
paid on corresponding reinsurance and adding thereto any interest or other
income arising in or derived from Hong Kong and the amount of any
balancing charge directed to be made under Part VI, and deducting therefrom
a reserve for unexpired risks at the percentage adopted by that corporation in
relation to its operations as a whole for such risks at the end of the period for
which such profits are ascertained, and adding thereto a reserve similarly
calculated for unexpired risks outstanding at the commencement of such
period, and from the amount so arrived at deducting the actual losses less the
amount recoverable in respect thereof under reinsurance, the agency expenses
in Hong Kong and the allowances provided under Part VI to the extent to
which the relevant assets are used in the production of such profits, and a fair
proportion of the expenses of the head office of the corporation: (Amended
49 of 1956 s. 20; 7 of 1975 s. 22)
Provided that where the Commissioner is satisfied that, by reason of the
limited extent of such business transacted in Hong Kong by a non-resident
insurance corporation it would be unreasonable to require such corporation to
furnish the particulars necessary for the application of this section, he may
permit the assessable profits of the corporation to be ascertained by reference to
the proportion of the total profits and income of the corporation corresponding
to the proportion which its premiums from insurance business in Hong Kong
bear to its total premiums or on any other basis which appears to him to be
equitable.
(2) For the purposes of this section 'premiums from insurance business in
Hong Kong' shall include-
(a)all premiums in respect of contracts of insurance other than life
insurance made in Hong Kong; and
(b)all premiums on contracts of insurance other than life insurance
the proposals for which were made to the corporation in Hong
Kong. (Amended 49 of 1956 s. 20)
(Added36 of 1955 s. 33.Amended 7of 1986s. 12)





23AA. Mutual insurance corporations

For the purposes of this Part, a mutual insurance corporation shall be
deemed to carry on an insurance business the surplus from which shall
be ascertained in the manner provided in sections 23 and 23A for ascertaining
assessable profits and shall be deemed to be assessable profits chargeable to tax
under section 14.
(Added 26 of 1969 s. 15)

23B. Ascertaimnent of the assessable
profits of a resident ship-owner

(1) Where a person carries on a business as an owner of ships and
either---
(a)the business is normally controlled or managed from within
Hong Kong; or
(b) such person is a company incorporated in Hong Kong,
such person shall be deemed to be carrying on that business in Hong Kong and
the assessable profits from that business for any year of assessment shall be the
sum bearing the same ratio to the aggregate of the sums receivable during the
basis period for such year of assessment by such person in respect of the
carriage of passengers, mails, livestock and goods shipped in Hong Kong, in
respect of outward towage undertaken from Hong Kong and in respect of
charter hire other than charter hire attributable to a permanent establishment
maintained by such person outside Hong Kong as his total profits for the basis
period bear to the aggregate of the total sums receivable by him during that
period in respect of the carriage of passengers, mails, livestock and goods, in
respect of towage and in respect of charter hire: (Amended 35 of 1965 s. 12)
Provided that in calculating the sums receivable in respect of the carriage
of passengers, mails, livestock and goods shipped in Hong Kong nothing shall
be included in respect of the shipment of goods brought to Hong Kong solely
for transhipment unless the outward freight is payable in Hong Kong.
(Amended 7 of 1986 s. 12)
(2) In this section-
'business as an owner of ships' does not include dealing in ships or agency
business in connection with shipping; (Added2of]97]s.15)
'charter hire' means sums receivable by a ship-owner under a charter party
which is either a bare boat, voyage or time charter and under which there is
a demise of the ship; (Amended 2 of 1971 s. 15)
,,owner' includes a charterer;
'permanent establishment' means a branch, management or other place of
business, but does not include an agency unless the agent has, and
habitually exercises, a general authority to negotiate and conclude
contracts on behalf of his principal;





',ship' includes aircraft;
'total profits' for any period means the world profits of a person from his
business as an owner of ships as shown by his accounts for such period:
Provided that where the said total profits have been computed on a
basis which differs materially from that prescribed in this Part for the
ascertainment of assessable profits in respect of which a person is
chargeable to tax, such profits shall be adjusted so as to correspond as
nearly as may be to the sum which would have been arrived at had they
been computed in accordance with the provisions of this Part relating to
the ascertainment of assessable profits in respect of which a person is
chargeable to tax. (Replaced 7 of 1975 s. 23)
(3) For the purposes of this section, a sum receivable by a ship-owner
under a charter party other than a bare boat, voyage or time charter under
which there is a demise of the ship, shall be taken to be receivable from the
carriage of passengers, mails, livestock and goods or in respect of towage.
(Added 2 of 1971 s. 15)
(Added 49 of 1956 s. 21)

of a non-resident ship-owner

(1) Where a person to whom the provisions of section 23B do not apply
carries on a business as an owner of ships and any ship owned or chartered by
him calls at Hong Kong such person shall be deemed to be carrying on that
business in Hong Kong, and the assessable profits from such business for any
year of assessment shall be the sum bearing the same ratio to the aggregate of
the sums receivable during the basis period for such year of assessment by such
person in respect of the carriage of passengers, mails, livestock and goods
shipped in Hong Kong, in respect of outward towage undertaken from Hong
Kong and in respect of charter hire attributable to a permanent establishment
maintained by such person in Hong Kong as his total profits for the basis
period bear to the aggregate of the total sums receivable by him during that
period in respect of the carriage of passengers, mails, livestock and goods, in
respect of towage and in respect of charter hire: (Amended 35 of 1965 s. 13)
Provided that in calculating the sums receivable in respect of the carriage
of passengers, mails, livestock and goods shipped in Hong Kong nothing shall
be included in respect of the shipment of goods brought to Hong Kong solely
for transhipment unless the outward freight is payable in Hong Kong.
(Amended 7 of 1986 s. 12)
(2) Where in the opinion of the assessor the provisions in subsection (1)
for computing assessable profits cannot for any reason be satisfactorily applied
in the case of any particular person, the assessable profits of such person for
any year of assessment may be computed on a fair percentage of the aggregate





of the sums receivable during the basis period for such year of assessment by
such person in respect of the carriage of passengers, mails, livestock and goods
shipped in Hong Kong, in respect of outward towage undertaken from Hong
Kong and in respect of charter hire attributable to a permanent establishment
maintained by such person in Hong Kong: (Amended 35 of 1965 s. 13; 7 of
1986s.12)
Provided that where the profits of any person have been assessed for any
year of assessment in accordance with this subsection, such person shall,
notwithstanding the provisions of section 70, be entitled to claim at any time
within 2 years of the end of such year of assessment that his assessable profits
for that year be recomputed on the basis provided by subsection (1) of this
section.
(3) Where the Commissioner is satisfied that the call of a ship owned or
chartered by a person to whom the provisions of this section apply is casual and
that further calls at Hong Kong by that ship or others in the same ownership
are improbable, he may in his discretion direct that such person shall not be
deemed to be carrying on business in Hong Kong by reason of such casual call.
(Amended 7 of 1986 s. 12)
(4) The master of any ship owned by a person to whom the provisions of
this section apply shall, though not to the exclusion of any other agent, be
deemed to be the agent of such person.
(5) In this section-
'business as an owner of ships' does not include dealing in ships or agency
business in connection with shipping; (Added2of]97]s.16)
'charter hire' means sums receivable by a ship-owner under a charter party
which is either a bare boat, voyage or time charter and under which there is
adernise of the ship; (Amended2of]97]s.16)
,,owner' includes a charterer;
'permanent establishment' means a branch, management or other place of
business, but does not include an agency unless the agent has, and
habitually exercises, a general authority to negotiate and conclude
contracts on behalf of his principal;
'ship' includes aircraft;
'total profits' for any period means the world profits of a person from his
business as an owner of ships as shown by his accounts for such period:
Provided that where the said total profits have been computed on a
basis which differs materially from that prescribed in this Part for the
ascertainment of assessable profits in respect of which a person is
chargeable to tax, such profits shall be adjusted so as to correspond as
nearly as may be to the sum which would have been arrived at had they
been computed in accordance with the provisions of this Part relating to
the ascertainment of assessable profits in respect of which a person is
chargeable to tax.(Replaced 7 of 1975 s. 24)





(6) For the purposes of this section, a sum receivable by a ship-owner
under a charter party other than a bare boat, voyage or time charter under
which there is a demise of the ship, shall be taken to be receivable from the
carriage of passengers, mails, livestock and goods or in respect of towage.
(Added2 of 1971 s. 16)
(Added 49 of 1956 s. 2 1)

24. Clubs, trade associations, etc.

(1) Where a person carries on a club or similar institution which receives
from its members not less than half of its gross receipts on revenue account
(including entrance fees and subscriptions), such person shall be deemed not to
carry on a business; but where less than half of its gross receipts are received
from members, the whole of the income from transactions both with members
and others (including entrance fees and subscriptions) shall be deemed to be
receipts from a business, and such person shall be chargeable in respect of the
profits therefrom. (Amended 36 of 1955 s. 23; 49 of 1956 s. 22)
(2) Where a person carries on a trade, professional or business association
in such circumstances that more than half its receipts by way of subscriptions
are from persons who claim or would be entitled to claim that such sums
were allowable deductions for the purposes of section 16, such person shall be
deemed to carry on a business, and the whole of the income of such association
from transactions both with members and others (including entrance fees and
subscriptions) shall be deemed to be receipts from business, and such person
shall be chargeable in respect of the profits therefrom. (Amended 36 of
1955 s. 34; 2 of 1971 s. 17,.40 of 1972 s. 3)
(3) In this section, 'members' means those persons entitled to vote at
a general meeting of the club, or similar institution, or trade, professional or
business association. (Replaced 36 of 1955 s. 34. Amended40of]972s.3)

25. Deduction of property tax from profits tax

Where property tax is payable for any year of assessment under Part 11
in respect of any land or buildings owned by a person carrying on a trade,
profession or business, any profits tax payable by such person in respect of that
year of assessment shall be reduced by a sum not exceeding the amount of such
property tax paid by him:
Provided that-
(a)no reduction shall be allowed unless either the profits derived
from such property are part of the profits of the trade, profession
or business carried on by such person or the property is occupied





or used by him for the purposes of producing profits in respect of
which he is chargeable to tax under this Part; (Replaced 11 of
1961 s. 5. Amended 35 of 1965 s. 14)
(b)if the amount of property tax paid for a year of assessment
exceeds the profits tax payable, the amount so paid in excess shall
be refunded in accordance with the provisions of section 79;
(Replaced 11 of 1961 s. 5)
(c)where property tax for the year of assessment commencing on 1
April 1960, or earlier years, exceeded the profits tax payable for
such years the amount of the excess shall be set ofr against the
profits tax payable for the year of assessment commencing on 1
April 1961, after deduction of the property tax paid for that year
and any balance left over shall be carried forward and set off
in like manner against the profits tax payable for the next
succeeding years. (Replaced 11 of 1961 s. 5)
(Replaced 3 of 1949 s. 9)

26.Exclusion of certain dividends and profits from
the assessable profits of other persons

For the purposes of this Part-
(a)a dividend from a corporation which is chargeable to tax under
this Part shall not be included in the profits in respect of which
any other person is chargeable to tax under this Part; and
(b)save as otherwise provided no part of the profits or losses of
a trade, profession or business carried on by a person who is
chargeable to tax under this Part shall be included in ascertaining
the profits in respect of which any other person is chargeable to
tax under this Part. (Added2of]97]s.18)
(Replaced 16 of 1951 s. 5. Amended 28 of 1964 s. 10; 2 of 1971 s. 18; 7
of 1975 s. 25; 62 of 1975 s. 2)

26A. Exclusion of certain profits from tax

(1) For the purposes of this Part-
(a)interest paid or payable on a Tax Reserve Certificate issued by
the Commissioner;
(b)interest paid or payable on a Government bond issued under the
Loans (Government Bonds) Ordinance (Cap. 64); and
____~c) any profit on the salg~)f such a Government bond,
shall no-t'be included in the profits of any corporation or other person
chargeable to tax under this Part.





(1A) (a) For the purposes of this Part-
(i) the profits on the disposal of securities by trustees; and
(ii) sums received or accrued to trustees by way of interest,
where the trustees are trustees under a unit trust authorized
under section 15 of the Securities Ordinance (Cap. 333), shall not
be included in the profits of any corporation or other person
chargeable to tax under this Part. (Replaced 36 of 1984 s. 5)
(b) In this subsection
'securities' includes any negotiable receipt or other negotiable
certificate or document evidencing the deposit of a sum
of money, or any rights or interests arising under any
such receipt, certificate or document; but otherwise has the
same meaning as in section 2(1) of the Securities Ordinance
(Cap. 333); and
'unit trust' has the same meaning as in section 2(1) of the
Securities Ordinance (Cap. 333).
(c)Notwithstanding section 70, this subsection applies to any year
of assessment commencing before, on or after 1 April 1983.
(Added 13 of 1983 s. 2)
(2) (Repealed 17 of 1989 s. 6)
(Replaced 62 of 1975 s. 3)

27. (Repealed 51 of 1978 s. 9) '

PART V

(Repealed 17 of 1989 s. 7)

PART VI

DEPRECIATION, ETC.

34.Initial and annual allowances, industrial
buildings and structures

(1) Where a person incurs capital expenditure on the construction of a
building or structure which is to be an industrial building or structure
occupied for the purposes of a trade there shall be made to the person who
incurred the expenditure for the year of assessment in the basis period for
which the expenditure was incurred an allowance to be known as an 'initial
allowance' equal to one-fifth thereof.. (Amended 30 of 1950 Schedule; 35 of
1965s.17)





Provided that-
(a)no initial allowance shall be made for the 8 successive years of
assessment commencing on 1 April in each of the years 1957 to
1964;
(b)where any initial allowance has been made in relation to capital
expenditure on a building or structure under this subsection
before such building or structure comes to be used and when it
first comes to be used it is not an industrial building or structure,
such allowance shall be disallowed and such additional
assessments as may be necessary consequent thereon shall be
made. (Replaced 35 of 1965 s. 17(2) (a)Where any person is, at the end of the basis period for any year
of assessment, entitled to an interest in a building or structure
which is an industrial building or structure and where that
interest is the relevant interest in relation to the capital
expenditure incurred on the construction of that building or
structure an allowance for depreciation by wear and tear, to
be known as an 'annual allowance', equal to one-twenty-fifth
of that expenditure shall be made to him for that year of
assessment. (Amended36of]955s.41;35of]965s.17)
(b)Where the interest in a building or structure, which is the relevant
interest in relation to any expenditure, is sold while the building
or structure is an industrial building or structure the annual
allowance, in the years of assessment the basis periods for which
end after the time of that sale shall be computed by reference to
the residue of expenditure immediately after the sale and shall be
the fraction of the said residue the numerator of which is 2, where
the building or structure was first used before the commencement
of the basis period for the year of assessment commencing on
1 April 1965, and one, where the building or structure was first
used on or after the commencement of such basis period, and
the denominator of which is the number of years of assessment
comprised in the period which-
(i)begins with the first year of assessment for which the buyer is
entitled to an annual allowance or would be so entitled if the
building or structure had at all material times continued to
be an industrial building or structure; and
(ii) ends with the year of assessment which, where the building
or structure was first used before the commencement of the
basis period for the year of assessment commencing on
1 April 1965, is the 50th year after the year in which the
building or structure was first used, and where the building
or structure was first used on or after such basis period,





is the 25th year after the year of assessment in which the
building or structure was first used, and so on for any
subsequent sales. (Replaced 35 of 1965 s. 17)
(c)Notwithstanding anything in the preceding provisions of this
section, in no case shall the amount of an annual allowance for
any year of assessment in respect of any expenditure exceed such
as, apart from the writing off falling to be made by reason of
the making of that allowance, would be the residue of that
expenditure at the end of his basis period for that year of
assessment.

35. Balancing allowances and charges, industrial
buildings and structures

(1) Where any capital expenditure has been incurred on the construction
of a buileing or structure and any of the following events occurs while the
building or structure is an industrial building or structure, that is to say-
(Amended 30 of 1950 Schedule)
(a) the relevant interest in the building or structure is sold; or
(b)that interest, being a leasehold interest, comes to an end
otherwise than on the person entitled thereto acquiring the
interest which is reversionary thereon; or
(c)the building or structure is demolished or destroyed or, without
being demolished or destroyed, ceases altogether to be used,
an allowance or charge, to be known as a 'balancing allowance' or a
'balancing charge' shall, in the circumstances mentioned in this section, be
made to or, as the case may be, on the person entitled to the relevant interest
immediately before that event occurs for the year of assessment in his basis
period for which that event occurs:
Provided that no balancing allowance shall be made to any person where
the building or structure is demolished for purposes unconnected with or not in
the ordinary course of conduct of the trade or business for the purposes of
which the building or structure was used in circumstances qualifying for annual
allowances under section 34. (Replaced 35 of 1965 s. 18)
(2) Where there are no sale, insurance, salvage or compensation moneys,
or where the residue of the expenditure immediately before the event exceeds
those moneys, a balancing allowance shall be made and the amount thereof
shall be the amount of the said residue or, as the case may be, of the excess
thereof over the said moneys.
(3) If the sale, insurance, salvage or compensation moneys exceed the
residue, if any, of the expenditure immediately before the event, a balancing
charge shall be made and the amount on which it is made shall be an amount
equal to the excess or, where the residue is nil, to the said moneys.





(4) Notwithstanding anything in subsection (3), in no case shall the
amount on which a balancing charge is made on a person exceed the aggregate
of the following amounts, that is to say-
(a)the amount of the initial allowance, if any, made to him in respect
of the expenditure in question;
(b)the amount of the annual allowances, if any, made to him in
respect of the expenditure in question.

35A. Special provisions on termination
of leasehold interest

Where, on the termination of a leasehold interest-
(a)a lessee of any building or structure remains in possession thereof
with the consent of the lessor without a new lease being granted
to him, the leasehold interest shall be deemed for the purposes of
this Part to continue so long as he so remains in possession;
(b)a new lease is granted to the lessee either by way of regrant or in
pursuance of an option available to him under the terms of the
first lease, this Part shall have effect as if the second lease were a
continuation of the first lease.
(Added 2 of 1971 s. 27)

35B. Buildings and structures bought unused

Where capital expenditure is incurred on the construction of a building or
structure and, before that building or structure is used, the relevant interest
therein is sold- '
(a)the expenditure actually incurred on the construction thereof
shall be left out of account for the purposes of this Part and any
initial allowance made under section 34 shall be disallowed and
such additional assessments as may be necessary consequent
thereon shall be made; but
(b) (i)in a case where the person who sells that interest incurred
that expenditure and made that sale in the course of a trade
which consists, in whole or part, in the construction or
development of buildings or structures for the purpose of
sale, the person who buys that interest shall be deemed for
those purposes to have incurred, on the date when the
purchase price becomes payable, capital expenditure on the
construction thereof equal to the net price paid by him for
that interest; and
(ii) in any other case, the person who buys that interest shall
be deemed for those purposes to have incurred, on the





date when the purchase price becomes payable, capital
expenditure on the construction thereof equal to the
expenditure actually incurred on the construction of the
building or structure or to the net price paid by him for that
interest, whichever is the less: (Replaced 29 of 1982 s. 7)
Provided that-
(a)where in a case to which paragraph (b)(i) applies the relevant
interest in the building or structure is sold more than once before
the building or structure is used, only the person who buys that
interest on the occasion of the last of those sales shall be deemed
to have incurred capital expenditure on the construction of the
building or structure and that capital expenditure shall be equal
to the net price paid on the first sale or the net price paid by him,
whichever is the less;
(b)where in a case to which paragraph (b)(ii) applies the relevant
interest in the building or structure is sold more than once before
the building or structure is used, that paragraph shall have effect
only in relation to the last of those sales. (Replaced 29 of 1982
s. 7)
(Added 2 of 1971 s. 27)

36.Rebuilding allowance for a commercial
building or structure

Where at the end of the basis period for any year of assessment a person is
entitled to an interest in a commercial building or structure and where that
interest is the relevant interest in relation to the capital expenditure incurred on
the construction of that building or structure, an allowance to be known as a
'rebuilding allowance' equal to three quarters of 1 % of the capital expenditure
incurred on the construction of such building or structure shall be made to him
for that year of assessment.
(Replaced 36 of 1955 s. 42. Amended 26 of 1969 s. 18)

36A. Application of provisions to machinery or plant

(1) Except where otherwise provided, in relation to the initial and annual
allowances on machinery or plant-
(a) sections 37, 37A, 38 and 39 shall apply to the years of assessment
up to and including the year of assessment commencing on 1
April 1979; and
(b)sections 3913, 39C and 39D shall apply to the year of assessment
commencing on 1 April 1980 and to subsequent years of
assessment.





(2) Where in relation to any machinery or plant the Commissioner is
satisfied that in respect of any year of assessment commencing on or after 1
April 1980 the application of any of the provisions of the sections referred to
in subsection (1)(b) is impracticable or inequitable, he may direct that the
provisions of the sections referred to in subsection (1)(a) shall apply to the
extent and for the duration specified in the direction.
(3) Where under subsection (2) the Commissioner directs that the
provisions of section 37 shall apply to any machinery or plant in respect of-
(a)the year of assessment commencing on 1 April 1980, the initial
allowance shall be equal to 35% of the expenditure referred to in
subsection (1) of that section;
(b)any year of assessment commencing on or after 1 April 1981,
the initial allowance shall be equal to 55% of the expenditure
referred to in subsection (1) of that section. (Replaced 29 of
1982s.8)
(Added 63 of 1980 s. 2)

37. Initial and annual allowances, machinery or plant
(1) Where a person carrying on a trade, profession or business incurs
capital expenditure on the provision of machinery or plant for the purposes
of producing profits chargeable to tax under Part IV then, except where such
expenditure is expenditure of a kind described in section 16B(I)(b), there
shall be made to him, for the year of assessment in the basis period for which
the expenditure is incurred, an allowance, to be known as an 'initial
allowance'. (Amended 30 of 1950 Schedule; 35 of 1965 s. 19; 26 of 1969
s. 19; 23 of 1974 s. 2)
(IA) For the purposes of subsection (1), the initial allowance shall be-
(a)in respect of a year of assessment up to and including the year of
assessment commencing on 1 April 1973, equal to one-fifth of the
expenditure referred to in subsection (1); and
(b)in respect of the year of assessment commencing on 1 April 1974
and all subsequent years of assessment up to and including the
year of assessment commencing on 1 April 1979, equal to
one-quarter of such expenditure. (Added 23 of 1974 s. 2.
Amended 32 of 1981 s. 4)
(2) Where at the end of the basis period for any year of assessment a
person owns and has in use machinery or plant for the purposes of producing
profits chargeable to tax under Part IV there shall be made to him in respect
of that year of assessment an allowance to be known as an 'annual allowance'
for depreciation by wear and tear of those assets. The allowance shall be
calculated at the rates prescribed by the Board of Inland Revenue and shall be
computed on the reducing value of the asset, which shall be the cost of the asset
reduced by-





(a)any initial allowance computed in accordance with the provisions
of this section; and
(b)by the annual allowances computed under the provisions of this
section:
Provided that-
(a)where the asset was acquired before the basis period in respect of
the year of assessment 1947/48 the value at the end of the basis
period shall be computed by deducting from the amount paid
for the asset by its present owner annual allowances as if
this subsection had been in force during the whole period of
ownership of the asset excluding any period during which the
owner was deprived of the use of the asset by reason of enemy
occupation;
(b)the Commissioner may in his discretion allow a higher rate than
that prescribed by the Board of Inland Revenue. (Amended 16
of 1951 s. 7,-35 of 1965 s. 19; 26 of 1969 s. 19)
(M) For the purposes of subsection (2), in any case where machinery or
plant is owned and used by a person for any period immediately before he uses it for
the purposes of producing profits chargeable to tax under Part IV, 'cost of the
asset' means the sum computed by deducting from the actual cost the notional
amount of the annual allowances which would have been made under subsection
(2) to the owner if since acquiring the asset he had used it for the purpose of
producing profits chargeable to tax under Part IV. (Added26of]969s.19)
(3) Nothing in subsection (2) shall apply in respect of any machinery or
plant owned and used by a person for the purposes of his trade or business
where such machinery or plant represents scientific research expenditure of
a capital nature which pursuant to section 16B(I)(b) has been allowed as a
deduction in ascertaining the profits from such trade or business in respect
of which such person in chargeable to tax under Part IV for any year of
assessment. (Added35of]965s.19)
(4) If a person succeeds to any trade, profession or business which
immediately before the succession-
(a) was carried on by another person; and
(b)made use of machinery or plant for the purpose of producing
profits chargeable to tax under Part IV,
and, immediately after the succession, such machinery or plant, without being
sold to the successor, is in use in that trade, profession or business for the same
purpose, the reduced value of such machinery or plant shall, for the purpose of
computing annual allowances under subsection (2), be taken to be the reduced
value thereof still unallowed to that other person as at the time of the
succession. (Added2of]97]s.28)
(5) Notwithstanding subsection (4), no initial allowance shall be made
under this Part by virtue of subsection (4). (Added2of]97]s.28)





and plant acquired under hire purchase agreement

(1) Where a person carrying on a trade, profession or business incurs
capital expenditure under a hire purchase agreement on the provision of
machinery or plant for the purposes of producing profits chargeable to tax
under Part IV then, except where such expenditure is expenditure of a kind
described in section 16B(I)(b), there shall be made to him for each year of
assessment in the basis period for which he has made an instalment payment
under such agreement, an initial allowance. (Amended 35 of 1965 s. 20; 26 of
1969 s. 20; 23 of 1974 s. 3)
(IA) For the purposes of subsection (1), the initial allowance shall be-
(a)in respect of a year of assessment up to and including the year of
assessment commencing on 1 April 1973, equal to one-fifth of the
capital portion only of the instalment payment referred to in
subsection (1);
(b)in respect of the year of assessment commencing on 1 April
1974 and all subsequent years of assessment up to and including
the year of assessment commencing on 1 April 1979, equal to
one-quarter of the capital portion only of such payment;
(c)in respect of the year of assessment commencing on 1 April 1980
equal to 35% of the capital portion only of such payment;
(Replaced 29 of 1982 s. 9)
(d)in respect of the year of assessment commencing on 1 April 1981
and all subsequent years of assessment up to and including the
year of assessment commencing on 1 April 1988, equal to 55% of
the capital portion only of such payment; and (Added29 of
1982 s. 9. Amended 17 of 1989 s. 8)
(e)in respect of any year of assessment commencing on or after 1
April 1989, equal to 60% of the capital portion only of such
payment. (Added 17 of 1989 s. 8)
(2) Where at the end of the basis period for any year of assessment a
person has in use for the purposes of producing profits chargeable to tax under
Part IV, machinery or plant acquired by him under a hire purchase agreement
there shall be made to him in respect of that year of assessment an annual
allowance for depreciation by wear and tear on such machinery or plant.
(Amended 26 of 1969 s. 20)
(3) An annual allowance under this section shall be calculated at rates
prescribed by the Board of Inland Revenue and shall be computed on the
reducing value of such machinery or plant which shall be the full cost thereof,
excluding any interest which may be included in such cost under the terms
of the agreement and reduced by any initial or previous annual allowances
computed under this section:(Amended 35 of 1965 s. 20)





Provided that the Commissioner may in his discretion allow a higher rate
than that prescribed by the Board of Inland Revenue.
(4) Nothing in subsection (2) shall apply in respect of any machinery or
plant used by a person for the purposes of his trade or business where such
machinery or plant represents scientific research expenditure of a capital nature
which pursuant to section 16B(I)(b) has been allowed as a deduction in
ascertaining the profits from such trade or business in respect of which such
person is chargeable to tax under Part IV for any year of assessment. (Added
35 of 1965 s. 20)
(Added36 of 1955 s. 43)

38. Balancing allowances and charges,
machinery or plant

(1) Where any of the following events occurs in the case of any machinery
or plant in respect of which an initial allowance or an annual allowance
has been made for any year of assessment to a person carrying on a trade,
profession or business, that is to say, either- (Amended 30 of 1950 Schedule)
(a) the machinery or plant is sold, whether while still in use or not; or
(b) the machinery or plant is destroyed; or
(c)the machinery or plant is put out of use as being worn out or
obsolete or otherwise useless or no longer required,
and the event in question occurs either whilst the person is carrying on his
trade, profession or business or at the time when he ceases so to do, an
allowance or charge, to be known as a 'balancing allowance' or a 'balancing
charge', shall in the circumstances mentioned in this section, be made to or, as
the case may be, on that person for the year of assessment in his basis period for
which that event occurs. (Amended 36 of 1955 s. 44)
(2) Where there are no sale, insurance, salvage or compensation moneys
or where the amount of the capital expenditure of the person in question on the
provision of the plant or machinery still unallowed as at the time of the event
exceeds those moneys, a balancing allowance shall be made, and the amount
thereof shall be the amount of the expenditure still unallowed as aforesaid or, as
the case may be, the excess thereof over the said moneys; but in a case where an
annual allowance has been computed on the cost of the asset as determined in
accordance with section 37(2A), the cost of the asset as computed in accordance
with that subsection shall be deemed to be the capital expenditure for the
purposes of this subsection and in a case where an annual allowance has been
computed in accordance with section 37(4), the reduced value used for the
purpose of that subsection shall be deemed to be the capital expenditure for the
purposes of this subsection. (Amended26of 1969s. 21; 2 of 1971 s. 29)
(3) If the sale, insurance, salvage or compensation moneys exceed the
amount, if any, of the said expenditure still unallowed as at the time of the





event, a balancing charge shall be made, and the amount on which it is made
shall be an amount equal to the excess or, where the said amount still unallowed
is nil, to the said moneys.
(4) Where by reason of a person ceasing to carry on his trade, profession
or business, machinery or plant in respect of which an initial or an annual
allowance has been made is put out of use, such person shall be deemed to
have received immediately prior to such cessation, sale moneys for such
machinery or plant of such an amount as the Commissioner may consider it
would have realized had it been sold in the open market at the time of
cessation:
Provided that if such person sells such machinery or plant within 12
months of the date of cessation he may claim the adjustment of any balancing
allowance or charge which may have been made to or on him as if such sale had
taken place immediately prior to the date of cessation and notwithstanding the
provisions of section 70 an assessor shall make any necessary correction to any
assessment. (Added36 of 1955 s. 44. Amended35of]965s.21)
(5) Notwithstanding anything contained in this section, in no case shall
the amount on which a balancing charge is made on a person exceed the
aggregate of the following amounts, that is to say- (Amended 36 of 1955
s.44)
(a)the amount of the initial allowance, if any, made to him in respect
of the expenditure in question;
(b)the amount of the annual allowances, if any, made to him in
respect of the expenditure in question, including any allowance
computed under proviso (b) to section 37(2) at a rate higher than
that prescribed by the Board of Inland Revenue. (Amended3of
1949s.13)

38A. Determination of cost of individual
assets sold together for one price

Where assets which qualify for initial or annual allowances under this Part
are sold together or with other assets in pursuance of one bargain the
Commissioner shall for the purposes of the calculation of the allowances and
charges provided for in this Part, and having regard to all the circumstances of
the transaction allocate a purchase price to each individual asset.
(Added36 of 1955 s. 45)

38B. Commissioner's power to determine
the true value of an asset on sale

Where an asset which qualifies for initial or annual allowances is sold,
and-





(a) the buyer is a person over whom the seller has control; or
(b) the seller is a person over whom the buyer has control; or
(e)both the seller and the buyer are persons over both of whom
some other person has control; or
(d)the sale is between a husband and wife, not being a wife living
apart from her husband, (Added 71 of 1983 s. 18)
the Commissioner shall, if he is of the opinion that the sale price of such asset
does not represent its true market value at the time of such sale, determine such
true market value and the amount so determined shall be deemed to be the sale
price of such asset for the purpose of calculating the allowances and charges
provided for in this Part.
(Added36 of 1955 s. 45)

38C. Special provision as to allowances
on a change in partnership

Where a change occurs in a partnership of persons carrying on any trade,
profession or business and an application made in accordance with the
provisions of the proviso to section 22(3) has been properly received by an
assessor the provisions of this Part shall apply as if no such change had
occurred except that any annual and rebuilding allowances in respect of assets
of the old partnership acquired by the new partnership granted for the year of
assessment in which such assets were acquired by the new partnership, shall be
apportioned pro rata between the old and the new partnership.
(Added36 of 1955 s. 45. Amended49of]956s.27)

39. Replacement of machinery or plant

Where machinery or plant in the case of which any of the events mentioned
in section 38(1) has occurred is replaced by the owner thereof and a balancing
charge falls to be made on him by reason of that event or, but for the provisions
of this section, would have fallen to be made on him by reason thereof, then, if
by notice in writing to the Commissioner he so elects, the following provisions
shall have effect, that is to say- (Amended 30 of 1950 Schedule)
(a)if the amount on which the charge would have been made is
greater than the capital expenditure on providing the new
machinery or plant-
(i) the charge shall be made only on an amount equal to the
difference; and
(ii) no initial allowance, no balancing allowance and no annual
allowance shall be made or allowed in respect of the new
machinery or plant or the expenditure on the provision
thereof; and





(iii) in considering whether any, and, if so, what balancing
charge falls to be made in respect of the expenditure on the
new machinery or plant, there shall be deemed to have been
made in respect of that expenditure an initial allowance
equal to the full amount of that expenditure;
(b) if the capital expenditure on providing the new machinery or
plant is equal to or greater than the amount on which the charge
would have been made~-
(i) the charge shall not be made; and
(ii) the amount of any initial allowance in respect of the said
expenditure shall be calculated as if the expenditure had
been reduced by the amount on which the charge would
have been made; and
(iii) in considering what annual allowance is to be made in
respect of the new machinery or plant, there shall be left out
of account a proportion of the machinery or plant equal to
the proportion which the amount on which the charge would
have been made bears to the amount of the said expenditure;
and
(iv) in considering whether any and, if so, what balancing
allowance or balancing charge falls to be made in respect of
the new machinery or plant, the initial allowance in respect
thereof shall be deemed to have been increased by an
amount equal to the amount on which the charge would
have been made.

of subsequent allowances

Where, by virtue of section 12(2), 1817(1) or 19E(I), the amount of any
allowance provided for under this Part is reduced, such reduction shall not
affect the calculation of subsequent allowances which shall be computed in the
first place as if the full amount of the allowance had been granted and shall then
where appropriate be apportioned in relation to the extent to which the relevant
assets are or have been used in the production of assessable income or
assessable profits.
(Added 7 of 1975 s. 27)

or plant under the pooling system

(1) Where a person carrying on a trade, profession or business incurs
capital expenditure on the provision of machinery or plant for the purposes of





producing profits chargeable to tax under Part IV then, except where such
expenditure is expenditure of a kind described in section 16B(1)(b), there shall
be made to him, for the year of assessment in the basis period for which the
expenditure is incurred, an allowance, to be known as an 'initial allowance'.
(Amended32of 1981 s. 6)
(IA) For the purposes of subsection (1), the initial allowance shall be
equal to the following percentages of the expenditure referred to in that
subsection-
(a) for the year of assessment commencing on 1 April 1980, 35%;
(b)for the year of assessment commencing on 1 April 1981 and all
subsequent years of assessment up to and including the year of
assessment commencing on 1 April 1988,55%; (Replaced29of
1982 s. 10. Amended 17 of 1989 s. 9)
(c)for any year of assessment commencing on or after 1 April 1989,
60%. (Added 17 of 1989 s. 9)
(2) Where during the basis period for any year of assessment or during
the basis period for any earlier year of assessment a person owns or has owned
and has in use or has had in use any machinery or plant for the purposes of
producing profits chargeable to tax under Part IV, there shall be made to him in
respect of each class of machinery or plant for that year of assessment an
allowance, to be known as an 'annual allowance', for depreciation by wear and
tear of such machinery or plant. (AmendedL.N. 262of 1985)
(3) The annual allowance shall be calculated at the rates of depreciation
prescribed by the Board of Inland Revenue and shall be computed on the
reducing value of each class of machinery or plant.
(4) Subject to subsections (5), (6) and (7), the reducing value of a class of
machinery or plant shall be the aggregate capital expenditure incurred on the
provision of the machinery or plant belonging to that class reduced by-
(a)the aggregate of any initial allowances computed in accordance
with section 37 in respect of any machinery or plant belonging to
that class;
(b)the aggregate of any annual allowances computed in accordance
with section 37 in respect of any machinery or plant belonging to
that class;
(c)the aggregate of any initial allowances computed in accordance
with this section in respect of any machinery or plant belonging
to that class;
(d) any annual allowance computed in accordance with this section;
(e)any sale, insurance, salvage or compensation moneys received in
respect of any machinery or plant belonging to that class; and
(f)any reducing value of machinery or plant excluded from the total
reducing value of a class of machinery or plant under section
39Q3).





(5) Where, prior to the commencement of the Inland Revenue
(Amendment) (No. 4) Ordinance 1980 (63 of 1980), any machinery or plant has
been the subject of a balancing allowance or balancing charge computed in
accordance with section 38, such machinery or plant shall, for the purposes of
subsection (4), be excluded from the class of machinery or plant.
(6) Where any machinery or plant is owned and used by a person for any
period immediately before he uses it for the purposes of producing profits
chargeable to tax under Part IV, the capital expenditure incurred on the
provision of the machinery or plant for the purposes of subsection (4) shall be
computed by deducting from the actual cost the notional amount of the annual
allowances which would have been made under section 37 to the owner if since
acquiring the machinery or plant he had used it for the purpose of producing
profits chargeable to tax under Part IV.
(7) If a person succeeds to any trade, profession or business which
immediately before the succession-
(a) was carried on by another person; and
(b)the machinery or plant that was used at any time by that other
person for the purpose of producing profits chargeable to tax
under Part IV is not sold to the successor,
the reducing value of such machinery or plant shall, for the purpose of
computing annual allowances under subsection (3), be taken to be the reducing
value thereof still unallowed to that other person as at the time of succession.
(8) Notwithstanding subsection (7), no initial allowance shall be made
under this Part by virtue of subsection (7).
(9) No annual allowance shall be made where the reductions made under
subsection (4) exceed the aggregate capital expenditure incurred on the
provision of the class of machinery or plant.
(10) Nothing in subsection (2) shall apply in respect of any machinery or
plant owned and used by a person for the purposes of his trade or business where
such machinery or plant represents scientific research expenditure of a capital
nature which pursuant to section 16B(I)(b) has been allowed as a deduction in
ascertaining the profits from such trade or business in respect of which such person
is chargeable to tax under Part IV for any year of assessment.
(11) The Commissioner may in his discretion allow a higher rate of
depreciation in respect of any class of machinery or plant than that prescribed
by the Board of Inland Revenue.
(Added 63 of 1980 s. 3)

39C. Pooling system when not to apply

(1) The provisions of this Part which applied immediately prior to the
commencement of the Inland Revenue (Amendment) (No. 4) Ordinance 1980
(63 of 1980) shall continue to apply-





(a)subject to subsection (2), in respect of machinery or plant to
which section 37A applies;
(b) in respect of machinery or plant to which section 39A applies.
(2) Where, pursuant to the terms and conditions of a hire purchase
agreement, machinery or plant to which section 37A applies passes into the
ownership of the person carrying on a trade, profession or business who
incurred the capital expenditure under the hire purchase agreement, the
reducing value of such machinery or plant computed in accordance with that
section shall be included in the class of machinery or plant for the purposes of
section 39B for the years of assessment following the year of assessment during
the basis period for which the machinery or plant passed into the ownership of
that person.
(3) Where any machinery or plant which is included in a class of machinery
or plant for the purposes of section 39B and which was used wholly and
exclusively in the production of profits chargeable to tax under Part IV is
subsequently not so used wholly and exclusively in the production of such profits,
the provisions of this Part which applied immediately prior to the commencement
of the Inland Revenue (Amendment) (No. 4) Ordinance 1980 (63 of 1980) shall
apply to such machinery or plant in respect of the year of assessment during the
basis period for which the machinery or plant is subsequently not used wholly and
exclusively in the production of profits chargeable to tax under Part IV, and the
reducing value of such machinery or plant shall be deemed to be such an amount
as the Commissioner may consider it would have realized had it been sold in the
open market at the time it ceased to be used wholly and exclusively in the
production of such profits, and such reducing value shall be excluded from the
total reducing value of that class of machinery or plant.
(4) For the purposes of subsection (2), in the application of section 37A,
subsection (2) of that section shall be read as if 'during the basis period' was
substituted for 'at the end of the basis period'.
(Added 63 of 1980 s. 3)

391). Balancing allowances and charges
under the pooling system

(1) Where at the end of a basis period for a year of assessment the
aggregate reductions made under section 3913(4) in respect of a class of
machinery or plant exceed the aggregate capital expenditure incurred by a
person on the provision of machinery or plant belonging to that class-
(a)a charge, to be known as a 'balancing charge', shall be made on
him, and the amount on which it is made shall be an amount
equal to the excess; and
(b)the reducing value at the end of the basis period for that year of
assessment shall be nil.





(2) Subject to subsection (3) and except where subsection (4) applies,
where a person ceases to carry on his trade, profession or business in a year of
assessment, the aggregate of the sale, insurance, salvage or compensation
moneys, if any, of the machinery or plant in respect of which an initial
allowance or annual allowance has been made shall be compared with the
amount of the reducing value of the class of machinery or plant at the end of
the basis period for that year of assessment and-
(a)where there are no sale, insurance, salvage or compensation
moneys. or where the amount of the reducing value exceeds the
aggregate of such moneys, an allowance, to be known as a
'balancing allowance', shall be made to him, and the amount
thereof shall be the amount of the reducing value or, as the case
may be, the excess thereof over the aggregate of the said moneys;
or
(b)where there are sale, insurance, salvage or compensation moneys,
and the aggregate of such moneys exceeds the amount, if any,
of the reducing value, a charge, to be known as a 'balancing
charge', shall be made on him, and the amount on which it is
made shall be an amount equal to the excess or, where the
reducing value is nil, to the aggregate of the said moneys.
(3) Subsection (2) shall not apply on the occasion on which any
machinery or plant, to which section 39B(7) applies, passes by way of
succession.
(4) Where by reason of a person ceasing to carry on his trade, profession
or business machinery or plant in respect of which an initial allowance or
annual allowance has been made is put out of use and there are no sale,
insurance, salvage or compensation moneys, such person shall. subject to
subsection (5), be deemed to have received immediately prior to such cessation,
sale moneys for such machinery or plant of such an amount as the
Commissioner may consider it would have realized had it been sold in the open
market at the time of cessation.
(5) If a person sells any machinery or plant referred to in subsection (4)
within 12 months of the date of cessation he may claim the adjustment of any
balancing allowance or balancing charge which may have been made to or on
him as if such sale had taken place immediately prior to the date of cessation
and notwithstanding section 70 an assessor shall make any necessary correction
to any assessment.
(6) Notwithstanding anything contained in this section, where the
aggregate of any sale, insurance, salvage or compensation moneys in respect of
any machinery or plant exceeds the capital expenditure incurred on the
provision of that machinery or plant, the aggregate of such moneys shall-
(a)for the purposes of calculating a balancing charge under
subsection (2)(b); and





(b)in calculating the reducing value of the class of machinery or
plant under section 3913(4),
not exceed the capital expenditure incurred on the provision of that machinery
or plant.
(7) For the purposes of subsection (6), the capital expenditure incurred on
the provision of the machinery or plant shall be taken as- (Amended 7 of
1986s.6)
(a)in a case where section 37(2A) applies, the 'cost of the asset-
computed in accordance with that section;
(b)in a case where section 39B(6) applies, the capital expenditure
computed in accordance with that section; or
(c)in any other case, the aggregate capital expenditure incurred by
the person in question on the provision of the machinery or plant
for the purposes of producing profits chargeable to tax under
Part IV.
(Added 63 of 1980 s. 3)

expenditure on leased machinery and plant

(1) Notwithstanding anything to the contrary in this Part, a person (in
this section referred to as 'the taxpayer') who incurs capital expenditure on the
provision of machinery or plant, being machinery or plant acquired by the
taxpayer under a contract entered into after the commencement of the Inland
Revenue (Amendment) Ordinance 1986 (7 of 1986), for the purpose of
producing profits chargeable to tax under Part IV shall not have made to him
the initial or annual allowances prescribed in section 37, 37A or 39B if, at a time
when the machinery or plant is owned by the taxpayer, a person holds rights as
lessee under a lease of the machinery or plant, and-
(a)the machinery or plant was, prior to its acquisition by the
taxpayer, owned and used by that person (whether alone or
with others), or any associate of that person (which person or
any such associate is hereinafter referred to as 'the end-user');
or
(b)the machinery or plant, not being a ship or aircraft or any part
thereof, is while the lease is in force-
(i) used wholly or principally outside Hong Kong by a person
other than the taxpayer; and
(ii)the whole or a predominant part of the cost of the
acquisition or construction of the machinery or plant was
financed directly or indirectly by a non-recourse debt; or
(c)the machinery or plant is a ship or aircraft or any part thereof
and-





(i) the person holding rights as lessee is not a person who is
deemed by section 23B to be carrying on a business as the
owner of ships in Hong Kong; and
(ii) the whole or a predominant part of the cost of the acquisition
or construction of the ship or aircraft or the part thereof was
financed directly or indirectly by a non-recourse debt.
(2) Subsection (1)(a) shall not apply where-
(a)the machinery or plant was acquired by the taxpayer on payment
from the end-user at not more than the price which the end-user
paid to the supplier (not being a supplier who is himself an
end-user); and
(b)no initial or annual allowances have at any time prior to the
acquisition of the machinery or plant by the taxpayer been made
under section 37, 37A or 39B to the end-user in respect of such
machinery or plant.
(3) For the purposes of subsection (2) an allowance shall be deemed not
to have been made if the end-user, by notice in writing to the Commissioner
within 3 months of the date on which the capital expenditure on the provision
of machinery or plant giving rise to the allowance is incurred, or within such
further time as the Commissioner may, in any particular case, permit, disclaims
such allowance.
(4) For the purposes of this section machinery or plant owned or leased
by a trustee shall be deemed to be owned or leased both by the trustee and the
beneficiary under the trust or, in the case of a discretionary trust, both by the
trustee and by such beneficiary as the Commissioner may, in his discretion,
determine to be the beneficiary during the relevant basis period.
(5) In this section-
,,acquisition' means acquisition by a person as owner and includes holding or
hiring under a hire-purchase agreement or, if the hire-purchase agreement
is a conditional sale agreement, holding as purchaser;
llariangement' includes-
(a)any agreement, arrangement, understanding, promise or
undertaking, whether express or implied, and whether or not
enforceable, or intended to be enforceable, by legal proceedings;
and
(b)any scheme, plan, proposal, action or course of action or course
of conduct;
,,associate', in relation to a person holding rights as lessee under any lease of
machinery or plant, means-
(a) where the person holding such rights is a natural person-
(i) a relative of' the person holding such rights;
(ii)a partner of the person holding such rights and any relative
of that partner;





(iii)a partnership in which the person holding such rights is a
partner;
(iv) any corporation controlled by the person holding such rights,
by a partner of the person holding such rights or by a part-
nership in which the person holding such rights is a partner;
(v) any director or principal officer of any such corporation as is
referred to in subparagraph (iv);
(b) where the person holding such rights is a corporation-
(i) any associated corporation;
(ii) any person who controls the corporation and any partner of
such person, and, where either such person is a natural
person, any relative of such person;
(iii) any director or principal officer of that corporation or of any
associated corporation and any relative of any such director
or officer;
(iv) any partner of the corporation and, where such partner is a
natural person, any relative of such partner;
(c) where the person holding such rights is a partnership-
(i)any member of the partnership and, where such member is a
natural person, any relative of such member;
(ii)any partner of the partnership and, where such partner is a
natural person, any relative of such partner and, where such
partner is a partnership, any relative of any member of that
partnership who is a natural person;
(iii)any corporation controlled by the partnership or by any
partner thereof or, where such a partner is a natural person,
any relative of such partner;
(iv) any corporation of which any partner is a director or
principal officer;
(v) any director or principal officer of a corporation referred to
in subparagraph (iii);
'associated corporation' means-
(a) a corporation over which the person holding rights under any
lease of machinery or plant has control;
(b) a corporation which has control over such person holding rights,
being a corporation;
(c) a corporation which is under the control of the same person as
such person holding rights, being a corporation;
'beneficiary under the trusC means, where the trustee holds machinery or plant
on behalf of a beneficiary who is himself a trustee in respect of that
machinery or plant, the beneficiary for whom such machinery or plant is
ultimately held, being the person who has the use of, or the right to use,
such machinery or plant for his own benefit;





'conditional sale agreement' means an agreement for the sale of goods under
which the purchase price or part of it is payable by instalments, and the
property in the goods remains in the seller (notwithstanding that the buyer
is to be in possession of the goods) until such conditions as to the payment
of instalments or otherwise as may be specified in the agreement are
fulfilled;
44control', 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;
,lend-user' means any person (whether alone or with others) holding rights as
lessee under a lease of machinery or plant or any associate of such person;
'held for use' includes installed ready for use and held in reserve;
'lease' includes-
(a)any arrangement under which a right to use machinery or plant is
granted by the owner of the machinery or plant to another
person; and
(b)any arrangement under which a right to use machinery or plant,
being a right derived directly or indirectly from a right referred to
in paragraph (a), is granted by a person to another person,
but does not include a hire-purchase agreement or a conditional sale
agreement unless, in the opinion of the Commissioner, the right under the
agreement to purchase or obtain the property in the goods would
reasonably be expected not to be exercised;
'non-recourse debt', in relation to the financing of the whole or a predominant
part of the cost of the acquisition or construction of any machinery or
plant, means a debt where the rights of the creditor in the event of default
in the repayment of principal or payment of interest-
(a)are limited wholly or predominantly to any or all of the
following-
(i) rights (including a right to moneys payable) in relation to
the machinery or plant or the use of the machinery or
plant;
(ii)rights (including rights to moneys payable) in relation to
goods produced, supplied, carried, transmitted or delivered,
or services provided, by means of the machinery or plant;
(iii) rights (including a right to moneys payable) in relation to
the loss or disposal of the whole or a part of the machinery
or plant or of the taxpayer's interest in the machinery or
plant;





(iv) any conjunction of such rights as are referred to in
subparagraphs (i), (ii) and (iii);
(v) rights in respect of a mortgage or other security over the
machinery or plant; or
(vi) rights arising out of any arrangement relating to the
financial obligations of the end-user of the machinery or
plant towards the taxpayer, being financial obligations in
relation to the machinery or plant;
(b)are in the opinion of the Commissioner capable of being limited
as described in paragraph (a), having regard to either or both of
the following---
(i) the assets of the taxpayer;
(ii) any arrangement to which the taxpayer is a party; or
(c)where paragraphs (a) and (b) do not apply, are limited by reason
that not all of the assets of the taxpayer (not being assets that are
security for a debt of the taxpayer other than a debt arising in
relation to the financing of the whole or part of the cost of the
acquisition of the machinery or plant) would be available for the
purpose of the discharge of the whole of the debt so arising
(including the payment of interest) in the event of any action or
actions by the creditor or creditors against the taxpayer arising
out of the debt;
14principal office?' means-
(a)a person employed by a corporation who, either alone or jointly
with one or more other persons, is responsible under the
immediate authority of the directors for the conduct of the
business of the corporation; or
(b)a person so employed who, under the immediate authority
of a director of the body corporate or a person to whom para-
graph (a) applies, exercises managerial functions in respect
of the body corporate;
'relative' means the spouse, parent, child, brother or sister of the relevant
person, and, in deducing such a relationship, an adopted child shall be
deemed to be a child both of the natural parents and the adopting parent
and a step child to be the child of both the natural parents and of any step
parent;
,,used' includes held for use.
(Added 7 of 1986 s. 7)

40. Interpretation

(1) In this Part-
'basis period' has the meaning assigned to it by section 2 except that-





(a)where 2 basis periods overlap the period common to both shall be
deemed to fall in the first basis period only; and
(b)where there is an interval between the end of the basis period for
one year of assessment and the beginning of the basis period for
the next year of assessment the interval shall be deemed to fall in
the second basis period but where, in respect of salaries tax, the
interval is the year ending on 31 March 1973, that interval shall
not be deemed to fall in the second basis period; (Replaced 49
of 1956 s. 28. Amended 8 of 1973 s. 8)
'capital expenditure'~-
(a)includes interest paid and commitment fees incurred in respect of
a loan made for the sole purpose of financing the provision of
an industrial building or structure or commercial building or
structure or machinery or plant; but
(b)does not include expenditure which is reimbursed by way of or
attributable to any grant, subsidy or similar financial assistance
and in relation to the person incurring the expenditure does
not include any expenditure which is allowed to be deducted
in ascertaining for the purpose of Part IV the profits of a trade
or business carried on by that person; (Replaced 30 of 1981
s.7)
'capital expenditure on the provision of machinery or planC includes capital
expenditure on alterations to an existing building incidental to the
installation of that machinery or plant for the purposes of the trade,
profession or business;
'class of machinery or planC means the items of machinery or plant for which
the same rate of depreciation is prescribed by the Board of Inland
Revenue; (Added 63 of 1980 s. 4)
'commercial building or structure' means any building or structure or part of
any building or structure used by the person entitled to the relevant interest
for the purposes of his trade, profession or business other than an
industrial building or structure; (Replaced 35 of 1965 s. 22. Amended26
of 1969 s. 22)
'hire-purchase agreement' means an agreement for the bailment of goods
under which the bailee may buy the goods, or under which the property in
the goods will or may pass to the bailee; (Added 7 of 1986 s. 8)
'industrial building or structure' means any building or structure or part of
any building or structure used-
(a)for the purposes of a trade carried on in a mill, factory or other
similar premises; or
(b)for the purposes of a transport, tunnel, dock, water, gas or
electricity undertaking or a public telephonic or public
telegraphic service; or (Amended 39 of 1969 s. 5)





(c)for the purposes of a trade which consists of the manufacture of
goods or materials or the subjection of goods or materials to any
process; or
(d) for the purposes of a trade which consists in the storage-
(i) of goods or materials which are to be used in the
manufacture of other goods or materials; or
(ii)of goods or materials which are to be subjected in the course
of a trade to any process; or
(iii) of goods or materials on their arrival into Hong Kong; or
(Amended 7 of 1986 s. 12)
(e) for the purposes of the business of farming;
(f)for the purposes of scientific research in relation to any trade or
business,
and, in particular, the said expression includes any building or structure or
part of any building or structure used by a person carrying on a trade,
undertaking or business specified in paragraphs (a) to (e) of this definition
and provided by him for the welfare of workers employed in his trade,
undertaking or business and in use for that purpose:
Provided that-
(i) where part of the whole of a building or structure is, and part
thereof is not, an industrial building or structure, and the capital
expenditure which has been incurred on the construction of the
second mentioned part is not more than one-tenth of the total
capital expenditure which has been incurred on the construction
of the whole building or structure, the whole building or structure
and every part thereof shall be treated as an industrial building or
structure; and
(ii)subject to the provisions of paragraph (i) of this proviso but
notwithstanding anything else contained in the foregoing
provisions of this definition, the expression 'industrial building
or structure' shall not include any building or structure or part of
any building or structure used as a dwelling house (other than as
a dwelling house for the housing of manual workers), retail shop,
showroom, hotel or office; (Replaced 35 of 1965 s.22)
'relevant interest- means, in relation to any expenditure incurred on the
construction of a building or structure the interest in that building or
structure to which the person who incurred the expenditure was entitled
when he incurred it; (Amended 49 of 1956 s. 28)
'residue of expenditure' means the amount of the capital expenditure incurred
in the construction of a building or structure reduced by-
(a) the amount of any initial allowance made;
(b) any annual allowance made;
(c) any balancing allowance granted,





and increased by any balancing charges made:
Provided that in computing the residue of expenditure there shall be
written off, in respect of any year in which no initial or annual allowance
fell to be made, an amount of one-fiftieth of the capital expenditure in the
case of a year prior to the year of assessment commencing on 1 April 1965,
and one-twenty-fifth of the capital expenditure in the case of such or any
subsequent year of assessment, and for the purposes of this proviso 'year'
means the period which would have comprised a year of assessment in
respect of which an initial or annual allowance would have fallen to be
made if the building or structure had then been in use as an industrial
building or structure and the provisions of section 34 had then been in
force. (Replaced 35 of 1965 s. 22)
(2) For the purposes of this Part, any capital expenditure incurred for the
purposes of a trade, profession or business by a person about to carry on such
trade, profession or business shall be treated as if it had been incurred by that
person on the first day upon which he does carry on such trade, profession or
business. (Added35of]965s.22)
(3) References in this Part to capital expenditure incurred on the
construction of a building or structure do not include any expenditure incurred
on the acquisition of, or of rights in or over, any land. (Added29 of 1982
S. 11)
(Replaced 36 of 1955 s. 46)

40A. Initial allowances in years of assessment
1974175 to 1975176

(1) Where-
(a)the assessable profits of a person for the year of assessment com-
mencing on 1 April 1974 are computed under section 18A; and
(b)there is an interval between the end of the basis period for the
year of assessment ending on 31 March 1974 and the beginning
of the basis period for the year of assessment ending on 31 March
1975,
then, notwithstanding paragraph (b) of the definition of 'basis period' in
section 40(1), but subject to subsection (3) the initial allowance on capital
expenditure provided under this Part shall be made only on the higher of the
capital expenditure incurred in the interval or the second basis period referred
to paragraph (b) of this subsection.
(2) Where-
(a)the assessable profits of a person for the year of assessment
commencing on 1 April 1974 have been computed under section
18; and





(b)there is an interval between the end of the basis period for the
year of assessment ending on 31 March 1975 and the beginning
of the basis period for the year of assessment ending on 31 March
1976,
then, notwithstanding paragraph (b) of the definition of 'basis period' in
section 40(1), but subject to subsection (3), the initial allowance on capital
expenditure provided under this Part shall, in respect of the year of assessment
commencing on 1 April 1975, be made only on the higher of the capital
expenditure incurred in the interval or in the second basis period referred to in
paragraph (b) of this subsection.
(3) Where the amount of capital expenditure incurred in the interval and
the second basis period referred to in subsection (1)(b) or (2)(b) is the same, the
initial allowance shall be made only in respect of the capital expenditure
incurred in the second basis period.
(Added 7 of 1975 s. 28)

PART VII

PERSONAL ASSESSMENT

40B. Interpretation

In this Part, unless the context otherwise requires-
'individual' does not include-
(a) a wife unless she is a wife living apart from her husband; or
(b) a person under the age of 18;

'joint totoal income' means joint total income calculated in accordance with
section 42A.
(Added 71 of 1983 s. 19)

41. Election for personal assessment
y
(1) An individual being either a permanent or temporary resident may
elect for personal assessment on his total income.
(2) Where an individual is deceased a duly appointed executor shall have
the same right to elect for personal ahe total income of the
deceased as the deceased would have if he were alive. (Replaced 35 of 1965
s. 23. Amended 71 of 1983 s. 20)
(2A) Where-
(a)a deceased individual, or his executor on his behalf, elected, or is
deemed to have elected, to be personally assessed for the year of
assessment in which the deceased died; and
(b) that individual was a partner in a partnership; and





(c) that individual had a share of the partnership assessable profits or

losses in the year of assessment following that in which he died,
then his executor may claim to have that share of such assessable profits or losses
computed in accordance with Part IV included in the deceased's total income for the
year of assessment in which he died. (Added 7 of 1975 s. 29)

(3) Any election under this section shall be made in writing and lodged with the
Commissioner not later than 2 years after the end of the year of assessment in
respect of which the election is made or 1 month after an assessment of income or
profits forming part of the individual's total income for such year of assessment
becomes final and conclusive under section 70, whichever is the later.
(Amended2of]97]s.31)

(4) In this section-

'permanent resident' means an individual who ordinarily resides in Hong Kong;
(Amended 7 of 1986 s. 12)

'temporary resident means an individual who stays in Hong Kong for a period or a
number of periods amounting to more than 180 days during the year of
assessment in respect of which the election is made or for a period or periods
amounting to more than 300 days in 2 consecutive years of assessment one of
which is the year of assessment in respect of which the election is made.

(Replaced 36 of 1955 s. 47. Amended 71 of 1983 s. 20; 7 of 1986 s. 12)

42. Calculation of total income

(1) For the purposes of this Part the total income of an individual for any year
of assessment shall, subject to subsection (8), be the aggregate of the following
amounts

(a) (i) in respect of the years of assessment up to and including the year
of assessment commencing on 1 April 1982 and in a case
mentioned in section 5D(5), the sum which is equivalent to that
part of the net assessable value as ascertained in accordance
with sections 5(1A) and 5A on which any property tax is
chargeable on the individual which represents proportionately
the part or parts of the land or buildings or land and buildings in
respect of which the property tax is chargeable which have been
let for any period during the year of assessment, taking into
account both the area or areas let and the period or periods of
letting; (Amended 76 of 1975 s. 9; 8 of 1983 s. 12)

(ii) in respect of the years of assessment commencing on or after 1
April 1983, the sum equivalent to the net assessable value as
ascertained in accordance with sections 5(1A) and 511; (Added
8 of 1983 s. 12)





(b)the net assessable income of the individual for that year of
assessment; and (Replaced 71 of 1983 s. 21)
(c)the assessable profits of the individual for that year of assessment
computed in accordance with Part IV:
(d) (Repealed 17 of 1989 s. 10)
Provided that there shall be deducted from that part of the total income
arising from paragraph (a) the amount of any interest payable on any money
borrowed for the purpose of producing that part of the total income where the
amount of such interest has not been allowed and deducted under Part IV.
(Amended 17 of 1989 s. 10)
(2) There shall be deducted from the total income of an individual for any
year of assessment-
(a)subject to subsections (3) and (4), the aggregate of approved
charitable donations which are made during the year of
assessment by the individual and any spouse whose total income
is required to be aggregated with that of the individual under
section 42A, if such aggregate of donations is not less than $100;
and
(b)the amount of the individual's loss or share of loss for that year
of assessment computed in accordance with Part IV.
(3) An individual shall not be entitled under subsection (2)(a) to deduct
for any year of assessment any sum which is allowable as a deduction under
section 16, 16B, 16C or 16D or which has been allowed to the individual's
spouse against total income that is required to be aggregated with that of the
individual under section 42A
(4) The total amount
(a)of any sum which is allowable as a deduction under subsection
(2)(a); and
(b) any sum which is allowable as a deduction under section 16D,
shall not exceed 10% of the total amount of-
(i)the total income of the individual for the year of assessment;
and
(ii) any sum which is allowable as a deduction under section 16D.
(5) Where in any year of assessment the amount of an individual's loss
under subsection (2)(b) exceeds that individual's total income, after making the
deductions under subsection (2)(a), the amount of such excess shall be carried
forward and set off against the individual's total income for future years of
assessment:
Provided that, in a case wh Ir the total incomes of spouses are required to
be aggregated under section 42A auy such excess for either spouse shall, before
being carried forward and set o under this subsection, be reduced as far as can
be done by being set off against the total income of the other spouse as reduced
under subsection (2).






(6) Where under subsection (6) the amount of an individual's excess is
brought forward to any year of assessment that individual or, where that
individual is a wife not living apart from her husband, her husband shall,
whether or not elected under section 41 to be assessed under this Part,
be deemed for the purposes of this Ordinance to have elected for personal
assessment and shall be assessed to tax for that year of assessment under this
Part.

(7) The amount of any excess set off under subsection (5) against an
individual's total income or that of the individual's spouse for any year of
assessment shall not be set off for any other year of assessment.
(8) For the purposes of this Part the total income of an individual for
any year of assessment shall not include the profits or losses or share of
profits or losses of that individual as a member of any partnership (other
than a partnership referred to in section 345(2) of the Companies Ordinance
(Cap. 32)) consisting, at any time in that year of assessment, of more than
20partners. (Amended51of]978s.9)
(9) For the purposes of subsection (8), in calculating the number of
partners in a partnership there shall be included every partner in any other
partnership which is itself a partner in the first-mentioned partnership.

(10) In this section 'individual' includes a wife.
(Replaced 7 of 1975 s. 30. Amended 71 of 1983 s. 21)

42A. Husband and wife

For the purposes of this Part the total income (as reduced under section
42(2) and (5) a wife, not being a wife living apart from her husband, shall be
aggregated with the total income (as so reduced) of her husband to produce a
joint total income.
(Replaced 71 of 1983 s. 22)

42B. Allowances

(1) In giving effect to an election under the provisions of this Part he
assessor shall make a single assessment in the sum of the total income (as
reduced under section 42(2) and (5) ) of the individual or, in the case of a
husband and wife, not being a wife living apart from her husband, in the sum of
their joint total income, as reduced in either case by such of the following
allowances as may be appropriate- (Amended 7 of 1975 s. 31; 71 of 1983
s.23)

(a) an allowance of $32,000; (Amended 33 of 1973 s. 3; 48 of 1980
S. 3; 32 of 1981 s. 7; 29 of 1982 s. 12; 71 of 1983 s. 23; 28 of 1987
s. 5; 17 of 1989 s. 11)





(aa) an additional allowance of $7,000 if the individual was not
entitled during the year of assessment to an additional allowance
under paragraph (bb), but this allowance of $7,000 shall be
reduced by the percentage specified in Part I of Schedule 4 of the
amount, if any, by which- (Amended 48 of 1980,s. 3)
(i) in the case of an individual who is chargeable to salaries tax
under Part Ill, the net assessable income of that individual
as reduced by approved charitable donations provided for
under section 12BA, exceeds $39,000; and
(ii) in the case of an individual who has elected for personal
assessment under this Part, the total income of that
individual (as reduced under section 42(2) and (5)) exceeds
$39,000; (Added 32 of 1977 s. 2 Amended 29 of 1979 s. 2;
32 of 1981 s. 7; 29 of 1982 s. 12; 71 of 1983 s. 23; 19 of 1986
s. 4; 28 of 1987 s. 5; 28 of 1988 s. 4; 17 of 1989 s. 11)

(b) an allowance of $34,000 if at any time during the year of
assessment the individual was married to a wife: (Amended 33
of 1973 s. 3; 48 of 1980 s. 3; 32 of 1981 s. 7; 28 of 1987 s. 5; 17 of
1989 s.11)
Provided that-
(i) where the wife is living apart from her husband the
allowance shall be granted only where the husband is
maintaining or supporting the wife and on due claim being
made therefor by the husband;
(ii) where the allowance is granted in respect of a wife living
apart from her husband, the wife shall be treated as being a
wife not living apart from her husband for the purposes
of sections 10, 12B(2) and 13(1)(b)(ii) and of this Part;
(Amended 71 of 1983 s.23)

(iii) any claim made under this paragraph in respect of a wife
living apart from her husband may be revoked by the
husband within the year of assessment in respect of which it
was made or within 6 years after the expiration of that year;
(Replac 35 of 1965 s. 25)

(bb) an additional allowance of $14,000 if at any time during the year
of assessment the individual was married to a wife, but this
allowance of $14,000 shall be reduced by the percentage specified
in Part 2 of Schedule 4 of the amount, if any, by which-

(i) in the case of a husband and wife chargeable to salaries tax
under Part III, the aggregate of their net assessable incomes
as reduced by approved charitable donations provided for
under section 12BA, exceeds $80,000;





(ii) in the case of an individual who has elected for personal
assessment under this Part, the joint total income of that
individual and his wife exceeds $80,000:
Provided that-
(i) where the wife is living apart from her husband the
additional allowance shall be granted only where the
husband is maintaining or supporting the wife and on due
claim being made therefor by the husband;
(ii) where the allowance is granted in respect of a wife living
apart from her husband, the wife shall be treated as being a
wife not living apart from her husband for the purposes of
sections 10, 12B(2) and 13(1)(b)(ii) and of this Part;
(iii) any claim made under this paragraph in respect of a wife
living apart from her husband may be revoked by the
husband within the year of assessment in respect of which it
was made or within 6 years after the expiration of that year;
(Added32of 1977s. 2. Amended 29 of 1979 s.2;48 of l980
s. 3; 32 of 1981 s. 7; 29 of 1982 s. 12 ; 71 of 1983 s. 23; 21 of
1985 s. 2; 19 of 1986 s. 4; 28 of 1987 s.5; 28 of 1988 s. 4; 17
of 1989 s. 11)
(c) an allowance of $13,000 if the individual had living and was
maintaining during the year of assessment an unmarried child
who was-
(i) under the age of 18 years;
(ii) over the age of 18 years but under the age of 25 years and
was receiving full time education at a university, college,
school or other similar educational establishment; or
(iii)over the age of 18 years and was, by reason of physical or
mental disability, incapacitated for work,
and where the individual had more than one such child an
allowance of $9,000 for the 2nd child, $3,000 for the 3rd child
and $2,000 each for the 4th, 5th and 6th child and $1,000 for each
subsequent child:
Provided that--

(i) the total of the allowances to an individual in respect of his
children shall not exceed $34,000;
(ii) where 2 or more individuals are entitled to claim an
alowance under this paragraph in respect of the same child
for the same year of assessment, the allowance due shall be
apportioned on such basis as the Commissioner may decide
having regard to the contributions made by each individual
to the maintenance and education of the child during the
year of assessment; (Replaced 33 of 1973 s. 3. Amended





32 of 1977 s. 2; 48 of 1980 s. 3; 32 of 1981 s. 7; 29 of 1982
s. 12; 21 of 1985 s. 2,. 28 of 1987 s. 5; 28 of 1988 s. 4; 17 of
1989 s.11)
(cc) an allowance of $20,000 if at any time during the year of
assessment the individual had the sole or predominant care of a
child in respect of whom the individual was entitled during the
year of assessment to claim an allowance under paraoaph (c):
Provided that-
(i) an individual shall not be entitled to claim an allowance
under this paragraph-
(A)if during the year of assessment the individual was
entitled to claim an allowance under paragraph (b);
(B)by reason only that the individu made contributions
to the maintenance and education of the child during
the year of assessment; or
(C) in respect of any 2nd or subsequent child;
(ii) where 2 or more individuals are entitled to claim an allow-
ance under this paragraph in respect of the same child for the
same year of assessment, the allowance due shall be appor-
tioned on such basis as the Commissioner may decide-
(A)having regard to the respective periods for which each
individual had the sole or predominant care of the child
during the year of assessment; or
(B) if, in the opinion of the Commissioner, those periods
are uncertain, on such basis as the Commissioner may
decide as being just; (Added 17of 1989 s. 11)
(d) an allowance of $11,000, if the individual or his wife, not being a
wife living apart from her husband, maintains a parent of the
individual or his wife in the year of assessment and that parent at
any time in that year- (Amended 48 of 1980 s. 3; 32 of 1981
s. 7,. 29 of 1982 . 12; 19 of 1986 s. 4; 28 of 1988 s. 4; 17 of 1989
s.11)
(i) was a permanent resident in Hong Kong; and (Amended 7
of 1986 s.12)
(ii) was aged 60 or more or, being under the age of 60, was
eligible to claim an allowance under the Government's
Disability Allowance Scheme,
and an allowance under this paragraph may be granted in respect
of each such parent of the individual or his wife so maintained;
(Added 79 of 1978 s. 2)
(dd) additional allowance of $3,000 if a parent in respect of whom
the individual is eligible to claim an allowance under paragraph
(d) for the year of assessment was residing, otherwise than for





full valuable consideration, with the individual continuoijsly
throughout the year of assessment and, if there was more than
one such parent, an additional allowance under this paragraph
may be granted in respect of each such parent; (Added 35 of
1983 s. 3. Amended 21 of 1985 s. 2)
(e)an allowance of 515,000 or an amount equal to the income of
the wife which is aggregated with his income (whichever is the
less) if at any time during the year of assessment the individual
was married to a wife whose net assessable income is aggregated
with his net assessable income under section 12B(2), but an
individual shall not be granted an allowance under this
paragraph in any year of assessment unless the Commissioner is
satisfied that the income of the wife which is aggregated with
that of the individual is reasonable in amount having regard to
the services rendered in respect of which the income accrued.
(Added 28 of 1988 s. 4)
(f)-(h) (Repealed 33 of 1973s. 3)
(2) For the purposes of subsection (1)(d)--
(a)a parent shall only be treated as being maintained by an
individual or his wife if-
(i)the parent resides, otherwise than for full valuable
consideration, with the individual for a continuous period of
not less than 6 months in the year of assessment; or
(ii)the individual or his wife contributes not less than $1,200 in
money towards the maintenance of that parent in the year of
assessment;
(b) 'parent of the individual or his wife' means-
(i) a parent of whose marriage, being a marriage recognized by
the law of Hong Kong, the individual or his wife is the child;
(ii) a parent by whom the individual or his wife was adopted in
an adoption recognized by the law of Hong Kong;
(iii) a step-parent;
(iv) the natural mother of the individual or his wife; or
(v) a parent of a deceased husband or wife of the individual.
(Added 79 of 1978 s. 2. Amended 7 of 1986 s. 12)
(2A) An allowance under subsection (1)(d) or (dd) shall not be given to
more than one individual; and where
(a) the Commissioner has reason to believe that 2 or more
individuals are eligible to claim the allowance in respect of the
same parent for the same year of assessment, the Commissioner
shall not consider any claim until he is satisfied that the claimants
hav agreed which of them shall be entitled to claim the
allowance; or





(b) an allowance under subsection (1)(d) or (dd) has been granted-
(i)to 2 or more individuals in respect of the same parent for the
same year of assessment; or
(ii) to an individual and, within 6 months of such allowance
being granted, another individual appears to the Com-
missioner to be eligible to claim that allowance in respect of
the same parent for the same year of assessment,
the Commissioner shall invite the individuals to whom the
allowance has been granted and any other individual who
appears to the Commissioner to be eligible to claim the allowance
to agree which of them is to have the allowance and the
Commissioner may in consequence of such agreement or if the
individuals do not so agree within a reasonable time raise
additional assessments under section 60, within the period of time
specific in that section. (Added 79 of 1978 s. 2. Amended 35
of 1983 s.3)
(3) Every individual who claims an allowance under this section shall make
his claim on the form specified by the Board of Inland Revenue and an allowance
shall be granted only if the claim contains such particulars and is supported by
such proof as the Commissioner may require. (Amended 39 of 1969s.7)
(Added 36 of 1955 s. 49)

43. Rates of charge

(1) Tax shall be charged on the amount of the assessment referred to in
section 42B(1) and at the rates specified in Schedule 2-
(a) on the individual; or
(b) in the case of a husband and wife, not being a wife living apart
from her husband, on the husband unless they elect under section
58A to be separately charged, in which case tax shall be charged
in accordance with subsection (2C). (Replaced 71 of 1983 s. 24)
(1A) Notwithstanding subsection (1), the amount of tax charged under
that subsection shall not in any case exceed the amount which would have been
chargeable had the standard rate been charged on the total income (as reduced
under section 42(2) and (5) ) or, as the case may be, the joint total income.
(Added 65 of 1970 s. 8. Amended 7 of 1975 s. 32; 71 of 1983s. 24)
(2) Any property tax, any salaries tax and any profits tax paid under the
provisions of Parts II, 1II and IV respectively shall, where the relevant amounts
on which such taxes were calculated are included in the total income of the
person who paid the tax, be set ofr for the purposes of collection against the tax
charged under this Part on that person or, in the case of a husband and wife,
not being a wife living apart from her husband, who do not elect under section
58A to be separately charged, on the hushand. (Replaced 26 of 1969 s. 26.
Amended 8 of 1973 s. 11; 8 of 1983 s. 13; 71 of 1983 s. 24; 17 of 1989 s. 12)





(2A) (Repealed 17 of 1989 s. 12)
(2B) In respect of the years of assessment up to and including the year of
assessment commencing on 1 April 1982 and in a case mentioned in section
5B(5), any tax paid by the individual whether directly or indirectly under the
provision of Part II for a year of assessment for which he has elected personal
assessment, to the extent to which such tax- (Amended 30 of 1981 s. 8; 8 of
1983s.13)
(a) is available for set off under section 25;
(b)would have been refundable under section 5(3) except that the
relevant part of the land or buildings or land and buildings did
not qualify under the definition of building or part thereof in
section 5(5)(c);
(c) would have been refundable under section 7 except that the
relevant period when the land or buildings or land and buildings
were unoccupied did not consist of entire months in the year of
assessment,
shall be set off for the purposes of collection against the tax charged under this
Part on that individual for that year of assessm . (Added 26 of 1969 s. 26)
(2C) Where a husband and wife, not being a wife living apart from her
husband, elect under section 58A to be separately charged in respect of any year
of assessment, each spouse shall in respect of that year of assessment be charged
such proportion of the tax that would otherwise be payable under subsection
(1)(b) as the total income (as reduced under section 42(2) and (5)) of that
spouse bears to their joint total income. (Added 71 of 1983 s.24)

(3) Where the aggregate of the taxes which may be set off under
subsections (2) and (2B) exceeds the amount of tax charged under this Part, the
Commissioner shall, on receipt of a claim from the person charged in the form
specified by the Board of Inland Revenue and on being satisfied that the claim
is in order, refund such excess to that person. (Added 36 of 1955 s. 50.
Amended 26 of 1969 s. 26; 39 of 1969 s. 8; 30 of 1981 s. 8; 71 of 1983 s. 24; 17 of
1989s. 12)

43A. Interpretation
In this Part-
'child' means-
(a) the child of an individual by his wife or former wife; or
(b) in the case of a woman her own child; or
(e)in the case of Asiatics a child of the individual by his concubine if
such child is recognized by him and his family as a member of his
family; or
(d) an adopted child; or
(e) a step-child;





'income', in relation to any person, means income derived beneficially by that
person; (Replaced 71 of 1983 s. 25)
'loss' and 'losses' do not include a loss sustained by a person acting in his
capacity as the trustee of a trust. (Added30of]98]s.9)
(Added36 of 1955 s. 51)

PART VIII

DouBLE TAxATION RELIEF

(Amended 49 of 1956 s. 32)

44. (Repealed 49 of 1956 s. 33)

45. Relief in respect of Commonwealth income tax

(1) If any person resident in Hong Kong who has paid, by deduction or
otherwise, or is liable to pay, tax under this Ordinance for any year of
assessment on any part of his income, proves to the satisfaction of the
Commissioner that he has paid, by deduction or otherwise, or is liable to pay,
Commonwealth income tax for that year in respect of the same part of his
income, he shall be entitled to relief from tax in Hong Kong paid or payable by
him on that part of his income at a rate thereon to be determined as follows-
(a)if the Commonwealth rate of tax does not exceed one-half of the
rate of tax appropriate to his case under this Ordinance in Hong
Kong the rate at which relief is to be given shall be the
Commonwealth rate of tax;
(b)in any other case the rate at which relief is to be given shall be
half the rate of tax appropriate to his case under this Ordinance.
(Amended 30 of 1950 Schedule)
(2) If any person not resident in Hong Kong who has paid, by deduction
or otherwise, or is liable to pay, tax under this Ordinance for any year of
assessment on any part of his income proves to the satisfaction of the
Commissioner that he has paid, by deduction or otherwise, or is liable to pay
Commonwealth income tax for that year of assessment in respect of the same
part of his income, he shall be entitled to relief from tax paid or payable by him
under this Ordinance on that part of his income at a rate thereon to be
determined as follows-
(a)if the Commonwealth rate of tax appropriate to his case does not
exceed the rate of tax appropriate to his case under this
Ordinance, the rate at which relief is to be given shall be one-half
of the Commonwealth rate of tax;





(b)if the Commonwealth rate of tax appropriate to his case exceeds
the rate of tax appropriate to his case under this Ordinance, the
rate at which relief is to be given shall be equal to the amount by
which the rate of tax appropriate to his case under this Ordinance
exceeds one-half of the Commonwealth tax. (Amended 30 of
1950 Schedule)
(3) For the purposes of this section, Commonwealth income tax means
any income tax charged under any law in force in any part of the
Commonwealth (other than the United Kingdom or Hong Kong) if the
legislature of that part or place has provided for relief in respect of tax charged
on income both in that part or place and Hong Kong in a manner similar to
that provided in this section. (Amended 30 of 1950 Schedule)
(4) For the purpose of this section the expression 'rate of tax' when
applied to tax paid or payable under this Ordinance means the rate determined
by dividing the amount of the tax paid or payable for the year (before the
deduction of the relief granted under this section) by the amount of the income
in respect of which the tax paid or payable under this Ordinance has been
charged for that year and the Commonwealth rate of tax shall be computed in a
similar manner. (Replaced 49 of 1956 s. 34. Amended26of 1969s. 27)
(5) Where a person is for any year of assessment resident both in Hong
Kong and in a part or place in which Commonwealth income tax is charged, he
shall for the purposes of this section be deemed to be resident where during that
year he resides for the longer period. (Amended 30 of 1950 Schedule)
(6) The expression 'income' in this section shall mean income or profits.
(Added 30 of 1950 Schedule. Amended49of]956s.34)
(Amended 7 of 1986 s. 12)

46. Official secrecy
Where, under any law in force in any part of the Commonwealth provision
is made for the allowance of relief from income tax in respect of the payment of
tax under this Ordinance, the obligation as to secrecy imposed by section 4 of
this Ordinance shall not prevent the disclosure to the authorized officers of the
Government in that part of the Commonwealth of such facts as may be
necessary to enable the proper relief to be given in cases where relief is claimed
from tax under this Ordinance or from income tax in that part or place
aforesaid. (Amended 30 of 1950 Schedule)

47-48. (Repealed 49 of 1956 s. 35)

49. Double taxation arrangements
(1) If the Governor in Council by order declares that arrangements
specified in the order have been made with the Government of any territory





outside Hong Kong with a view to affording relief from double taxation in relation to
income tax and any tax of a similar character imposed by the laws of that territory,
and that it is expedient that those arrangements should have effect, the
arrangements shall have effect in relation to tax under this Ordinance
notwithstanding anything in any enactment. (Amended 7 of 1986 s. 12)

(2) (Repealed 49 of 1956 s. 36)

(3) On the making of an order under this section with respect to arrangements
relating to any territory forming part of the Commonwealth (other than the United
Kingdom or Hong Kong), section 45 shall cease to have effect as respects that
territory except in so far as the arrangements otherwise provide. (Amended 30 of
1950 Schedule; 7 of 1986 s. 12)

(4) Any order made under this section may be revoked by a subsequent order.

(5) Where any arrangements have effect by virtue of this section, the obligation
as to secrecy imposed by section 4 shall not prevent the disclosure to any
authorized officer of the Government with which the arrangements are made of such
information as is required to be disclosed under the arrangements.

(6) The Governor in Council may make rules for carrying out the provisions of
any arrangements having effect under this section.

(Amended 49 of 1956 s. 36)

50. Tax credits

(1) The provisions of this section shall have effect where, under arrangements
having effect under section 49, tax payable in respect of any income in the territory
with the Government of which the arrangements are made is to be allowed as a credit
against tax payable in respect of that income in Hong Kong; and in this section the
expression 'foreign tax' means any tax payable in that territory which under the
arrangements is to be so allowed and the expression 'tax' means tax chargeable
under this Ordinance. (Amended 7 of 1986 s. 12)

(2) The amount of the tax chargeable in respect of the income shall be reduced
by the amount of the credit:

Provided that credit shall not be allowed against tax for any year of assessment
unless the person entitled to the income is resident in Hong Kong for that year.
(Amended 7 of 1986 s. 12)

(3) The credit shall not exceed the amount which would be produced by
computing the amount of the income in accordance with the provisions of this
Ordinance and then charging it to tax at a rate ascertained by dividing the tax'
chargeable (before allowance of credit under any arrangements having effect under
section 49) on the total income of the person entitled to the income by the amount of
his total income.





(4) Without prejudice to the provisions of subsection (3), the total credit
to be allowed to a person for any year of assessment for foreign tax under all
arrangements having effect under section 49 shall not exceed the total tax
payable by him for that year of assessment. (Amended 17 of 1989 s. 13)
(5) In computing the amount of the income-
(a)no deduction shall be allowed in respect of foreign tax (whether
in respect of the same or any other income);
(b)where the tax chargeable depends on the amount received in
Hong Kong, the said amount shall be increased by the
appropriate amount of the foreign tax in respect of the income;
(Amended 7 of 1986 s. 12)
(c)where the income includes a dividend and under the
arrangements foreign tax not chargeable directly or by deduction
in respect of dividend is to be taken into account in considering
whether any, and if so what, credit is to be given against tax in
respect of the dividend the amount of the income shall be
increased by the amount of the foreign tax not so chargeable
which falls to be taken into account in computing the amount of
the credit,
but notwithstanding anything in the preceding provisions of this subsection a
deduction shall be allowed of any amount by which the foreign tax in respect of
the income exceeds the credit therefor.
(6) Subsection (5)(a) and (b) (but not the remainder thereof ) shall apply
to the computation of total income for the purposes of determining the rate
mentioned in subsection (3), and shall apply thereto in relation to all income in
the case of which credit falls to be given for foreign tax under arrangements for
the time being in force under section 49.
(7) Where-
(a)the arrangements provide, in relation to dividends of some
classes, but not in relation to dividends of other classes, that
foreign tax not chargeable directly or by deduction in respect of
dividends is to be taken into account in considering whether any,
and if so what, credit is to be given against tax in respect of the
dividends; and
(b)a dividend is paid which is not of a class in relation to which the
arrangements so provide,
then, if the dividend is paid to a company which controls, directly or indirectly
not less than one-half of the voting power in the company paying the dividend,
credit shall be allowed as if the dividend were a dividend of a class in relation to
which the arrangements so provide.
(8) Credit shall not be allowed under the arrangements against tax
chargeable in respect of the income of any person for any year of assessment if
he elects that credits shall not be allowed in the case of his income for that year.





(9) Any claim for an allowance by way of credit shall be made not later than 2
years after the end of the year of assessment, and in the event of any dispute as to
the amount allowable the claim shall be subject to objection and appeal in like
manner as an assessment.

(10) Where theamount of a credit given under the arrangement is rendered
excessive or insufficient by reason of any adjustment of the amount of any tax
payable either in Hong Kong or elsewhere, nothing in this Ordinance limiting the
time for the making of assessments or claims for relief shall apply to any assessment
or claim to which the adjustment gives rise, being an assessment or claim made not
later than 2 years from the time when all such assessments, adjustments and other
determinations have been made, whether in Hong Kong or elsewhere, as are material
in determining whether any and if so what credit falls to be given. (Amended 7 of
1986 s. 12)

PART IX

RETURNS, ETC.

51. Returns and information to be furnished

(1) An assessor may give notice in writing to any person requiring him within a
reasonable time stated in such notice to furnish any return which may be specified
by the Board of Inland Revenue for property tax, salaries tax or profits tax under
Parts 11, 111, IV, XA, XII and XC, containing such particulars and in such form as
may be specified by the Board of Inland Revenue. An assessor shall give notice to
any individual who has elected or has been deemed to have elected to be personally
assessed under Part VII requiring him within a reasonable time stated in such notice
to furnish a return of his total income assessable under this Ordinance, containing
such particulars and in such form as may be specified by the Board of Inland
Revenue. (Amended 35 of 1965 s. 26; 39 of 1969 s. 9; 8 of 1973 s. 12; 7 of 1975 s.
33; 8 of 1983 s. 14; 17 of 1989 s.14)

(2) Every person chargeable to tax for any year of assessment shall inform the
Commissioner in writing that he is so chargeable not later than 4 months after the
end of the basis period for that year of assessment unless he has already been
required to furnish a return under the provisions of suject section (1). (Replaced 49
of 1956 s. 37)

---(3) An assessor may give notice in writing to any person when and as often as he
thinks necessary requiring him within a reasonable time stated in such notice to
furnish fuller or further returns respecting any matter of which a return is required or
prescribed by this Ordinance.

(4) For the purposes of obtaining full information in regard to any matter which
may affect any liability, responsibility or obligation of any person under this
Ordinance





(a)an assessor or an inspector may give notice in writing to such
person, or to any other person whom he considers may be in
possession of information or documents in regard to any such
matter as aforesaid, requiring him within such reasonable time as
is stated in the notice to furnish all information in his possession
respecting any such matter, and to produce for examination any
deeds, plans, instruments, books, accounts, trade lists, stock lists,
vouchers, bank statements or other documents which the assessor
or inspector giving the notice considers are or may be relevant for
the purpose aforesaid:
Provided that in the case of a notice under this paragraph
requiring the production of any account kept by a solicitor and
relating to the affairs of any client or clients of his, production of
a copy of all relevant entries therein respecting any matter upon
which information is sought shall be a sufficient compliance with
the aforesaid requirement of the notice if the copy is certified by
the solicitor as being a correct copy of all relevant entries in such
account respecting the matter aforesaid;
(b)an assistant commissioner may give notice in writing to such
person, or to such other person, requiring him, at a time and
place to be named by the assistant commissioner, to attend and
be examined, and upon such examination to answer truthfully all
questions put to him, respecting any such matter as aforesaid.
(Replaced 35 of 1965 s. 26. Amended40ofl972s.4)
(4A) For the avoidance of doubt it is hereby declared that the powers
conferred by subsection (4) include the power to require information from, and
to require the attendance for the purpose of being examined of,-
(a)any person, or any employee of any person, who was a party to
any particular land or property transaction;
(b)any person, or any employee of any person, who has acted for
or is acting for any party to any particular land or property
transaction;
(c)any person who either paid or received, directly or indirectly, any
consideration, brokerage, commission or fee in respect of or in
connection with any particular land or property transaction; and
(d)any person, or any employee of any person, who was concemed
in the passing of any consideration, brokerage, commission
or fee, or in the clearing or collection of any cheque or other
instrument of exchange, respecting any particular land or
property transaction,
as to any of the following matters, that is to say-
(i) the full names (including aliases) and addresses of any of the
persons referred to in paragraphs (a) to (d) and any other





information in his possession which may be helpful in identifying or
locating any such persons;

(ii) any consideration, brokerage, commission or fee paid or received in
respect of or in connection with any such land or property
transaction; and

(iii) the terms and conditions of any such land or property transaction,

and the existence in respect of any communication, whether oral or written, of
privilege from disclosure shall not constitute any excuse for the nondisclosure of
information as to any of the matters specified in paragraphs (i) to (iii) where
disclosure thereof is required from any of the persons referred to in paragraphs (a) to
(d), but except as aforesaid nothing in subsection (4) shall require disclosure by
counsel or solicitor of any privileged information or communication given or made to
him in that capacity. (Added 35 of 1965 s.26)

(4B) (a)Any person who without reasonable excuse, the burden of proof
whereof shall lie upon him, fails to comply with the requirements of a
notice given to him under subsection (4)(a) or fails to attend in
answer to a notice issued under subsection (4)(b) or having attended
fails to answer any questions put to him, being questions which
under that paragraph may be put to him, shall be liable to a penalty of
$5,000 recoverable under section 75 as a civil debt due to the Crown:
(Amended 11 of 1985 s. 3)

Provided that-

(i)the Commissioner may compound any such penalty and may
before judgment in proceedings therefor stay or compound such
proceedings, or may refuse to accept payment of such penalty or
any part thereof except under a judgment of the court in
proceedings for the recovery thereof;

(ii) the court before which any proceedings for such penalty are
brought may, if it thinks fit, give judgment for a less amount.

(b)In addition to giving judgment for the penalty or any less amount as
aforesaid, the court may order the person against whom the
proceedings were brought to do, within a time specified in the order,
the act which he has failed to do. (Added 35 of 1965 s.26)

(5) A return, statement, or form purporting to be furnished under this Ordinance
by or on behalf of any person shall for all purposes be deemed to have been
furnished by that person or by his authority, as the case may be, unless the contrary
is proved, and any person signing any such return, statement, or form shall be
deemed to be cognizant of all matters therein.





(6) Any person who ceases to carry on any trade, profession or business
or who ceases to own any source of income or to be the owner of any land or
buildings or land and buildings in respect of which tax is chargeable under the
provisions of Part II, III, IV or VII shall so inform the Commissioner in writing
within 1 month of such cessation. (Replaced 49 of 1956 S. 37,.8 of 1983s. 14)
(7) Any person chargeable to tax under Part III, IV or VII who is about
to leave Hong Kong for any period exceeding 1 month shall give notice in
writing to the Commissioner of his expected date of departure, and if he intends
to return to Hong Kong the approximate date of his return. Such notice shall
be given not later than 1 month before the expected date of departure:
Provided that-
(a)the Commissioner may accept such shorter notice as he may
deem reasonable; and
(b)this subsection shall not apply in the case of an individual who is
required in the course of his employment, business or profession
to leave Hong Kong at frequent intervals. (Added 49 of 1956
s. 37. Amended 7 of 1986 s. 12)
(8) Any person chargeable to tax under Part 11, 111, IV or VII who
changes his address shall within 1 month inform the Commissioner in writing of
the particulars of the change. (Added 2 of 1971 s. 33. Amended 8 of 1983
s.14)
(9) (Repealed 43 of 1975 s.2)

51A. Power to require statement
of assets and liabilities etc.

(1) Where the Commissioner or the deputy commissioner is personally
of the opinion that a person has made an incorrect return or supplied false
information having the effect of understating his income or profits chargeable
to tax and has done so without reasonable excuse and not through an innocent
oversight or omission, the Commissioner may, with the consent of the Board of
Review, give notice in writing to such person requiring him to furnish within the
time limited by such notice, not being less than 30 days from the date of service
of the notice, a statement containing particulars of- (Amended 43 of 1975
s. 3; L.N. 377 of 1980)
(a)all assets which the person or his spouse possessed in Hong
Kong, including any possessed jointly or severally with any other
person, at such times as may be specified in the notice; and
(b)all liabilities to which the person or his spouse was subject in
Hong Kong, including any to which he was subject jointly or
severally with any other person, at such times as may be specified
in the notice; and





(c)all expenditure or disbursements from funds in Hong Kong,
including remittances overseas and gifts, incurred or made by the
person or his spouse during such periods as may be specified in
the notice; and
(d)all sums, including remittances, gifts and legacies received in
Hong Kong by the person or his spouse during such periods as
may be specified in the notice. (Amended 71 of 1983 s. 26; 7 of
1986s.12)
(2) A notice given under subsection (1) shall not specify any time or
period earlier than 7 years before the commencement of the year of assessment
in which it is given.
(3) An application for the consent of the Board of Review shall be made
in writing by the Commissioner to the clerk of the Board and shall be
accompanied by a statement of the material on the basis of which it is proposed
to exercise the powers of the Commissioner or deputy commissioner under
subsection (1).
(4) Upon receipt of an application under subsection (3), the Chairman of
the Board of Review shall appoint 3 members from the panel of the Board of
Review, one of whom shall be the Chairman or a deputy chairman, to consider
the application.
(5) When the Board is considering an application, the Commissioner or
his authorized representative may attend, but the person in respect of whom the
application is made may not attend.
(6) Subject to subsection (7), neither in the application nor on the
consideration thereof shall the identity of the person in respect of whom the
application is made be revealed to the Board of Review.
(7) If the person on whom a notice under subsection (1) has been given so
requests, the Commissioner shall furnish him with a certificate from the
Chairman or deputy chairman of the Board of Review certifying that the
Board's consent to the issue of the notice was given, and for the purpose of
obtaining such a certificate the Commissioner shall reveal to the Chairman or
deputy chairman the identity of that person.
(8) The decision of the Board of Review to grant or refuse consent shall
be final.
(Added26ofl969s.28. Amended40of]972s.5;43of]975s.3)

51B. Power to issue search warrant

(1) If the Commissioner, or an officer of the Inland Revenue Department
not below the rank of chief assessor authorized in writing by the Commissioner
for the purpose (in this section referred to as the authorized officer), satisfies a
magistrate, by statement made on oath,-





(a)that there are reasonable grounds for suspecting that a person
has made an incorrect return or supplied false information
having the effect of understating his income or profits chargeable
to tax and has done so without reasonable excuse and not
through an innocent oversight or omission; or
(b)that a person has failed to comply with an order of a court made
under section 80(1) directing him to comply with the require-
ments of a notice given to him under section 5 1 (1) or (3),
the magistrate may by warrant authorize the Commissioner or authorized
officer to exercise the following powers---
(i) without previous notice at any reasonable time during the day,
to enter and have free access to any land, buildings, or place
where he suspects there to be any books, records, accounts
or documents of that person, or of any other person, which
may afford evidence material in assessing the liability of the
first-mentioned person for tax, and there to search for and
examine any books, records, accounts or documents; (Amended
43 of 1975 s. 4)
(ii) in carrying out any such search, to open or cause to be removed
and opened, any article in which he suspects any books, records,
accounts or documents to be contained;
(iii) to take possession of any books, records, accounts or documents
of that person or that person's spouse, and to make copies of
such parts of any books, records, accounts or documents of any
other person, as may atford evidence material in assessing the
liability of the first-mentioned person for tax; (Replaced 43 of
1975 s. 4. Amended 71 of 1983 s. 27)
(iv) to retain any such books, records, accounts or documents for as
long as they may be reasonably required for any assessment to be
made or for any proceedings under this Ordinance to be
completed:
Provided that if the Commissioner or authorized officer shall
retain any book, record, account or document for a period of
more than 14 days, the person aggrieved may apply in writing to
the Board of Review for an order directing the return thereof
and the Board of Review, after hearing the applicant or
his authorized representative and the Commissioner or his
representative, may so order, either unconditionally or subject to
any condition which the Board may consider it proper to impose.
(Amended 7 of 1975 s. 34)
(IA) Any officer of the Inland Revenue Department under the direction
of the Commissioner or an authorized officer may assist the Commissioner or
an authorized officer in the execution of a warrant issued under subsection (1)





and may exercise any of the powers referred to in subsection (1)(i), (ii) and (iii).
(Added40 of 1972 s. 6)
(2) When exercising any power under subsection (1), the Commissioner
or authorized officer shall produce on demand the warrant issued to him under
that subsection.
(3) The person to whose affairs any books, records, accounts or
documents taken possession of under subsection (1) relate shall be entitled to
examine and make extracts from them at such times and under such conditions
as the Commissioner may determine.
(4) Any person who obstructs or hinders the Commissioner or an
authorized officer acting in the discharge of his duty under subsection (1) or an
officer assisting him under subsection (1A) shall be guilty of an offence: Penalty
a fine of $2,000 and imprisonment for 6 months.
(Added26of]969s.28. Amended40of]972s.6)

51C. Business records to he kept
(1) Subject to subsection (2), every person carrying on a trade, profession
or business in Hong Kong shall keep sufficient records in the English or Chinese
language of his income and expenditure to enable the assessable profits of such
trade, profession or business to be readily ascertained and shall retain such
records for a period of not less than 7 years after the completion of the
transactions, acts or operations to which they relate. (Amended 7 of 1986
s.12)
(2)Subsection (1) shall not require the preservation of any records-
(a) which the Commissioner has specified need not be preserved; or
(b) of a corporation which has been dissolved.
(Added 26 of 1969 s. 28)

51D. Rent records to he kept
(1) Subject to subsection (2), every person who is the owner of land or
buildings or land and buildings situated in Hong Kong shall keep sufficient
records in the English or Chinese languages of the consideration, in money or
money's worth, payable or deemed to be payable to him, to his order or for his
benefit on or after 1 April 1983 in respect of the right of use of that land or
buildings or land and buildings to enable the assessable value of that land or
buildings or land and buildings to be readily ascertained and shall retain such
records for a period of not less than 7 years after the completion of the
transactions, acts or operations to which they relate.
(2)Subsection (1) shall not require the preservation of any records-
(a) which the Commissioner has specified need not be preserved; or
(b) of a corporation which has been dissolved.
(Added 8 of 1983 s. 15)





52. Information to be furnished by
officials and employers
(1) The Commissioner may give notice in writing to any officer in the
employment of the Government or of any public body requiring him within a
reasonable time stated in such notice to furnish any particulars which he may
require for the purposes of this Ordinance which may be in the possession of
such officer:
Provided that no such officer shall by virtue of this section be obliged to
disclose any particulars as to which he is under any express statutory obligation
to observe secrecy.
(2) Every person who is an employer shall, when required to do so by
notice in writing given by an assessor, furnish within a reasonable time stated in
such notice a return containing the names and places of residence and the full
amount of the remuneration, whether in cash or otherwise, for the period
specified in the notice, of-
(a)all persons employed by him in receipt of remuneration in excess
of a minimum figure to be fixed by the assessor; and
(b) any other person employed by him named by the assessor.
(3) For the purposes of this section, any director of a company, or person
engaged in the management of a company, shall be deemed to be a person
employed by the company. (Amended 7 of 1986 s. 9)
(4) Where any person who is an employer commences to employ in Hong
Kong an individual who is or is likely to be chargeable to tax under Part Ill, or
any married woman, he shall give notice thereof in writing to the Commissioner
not later than 3 months after the date of commencement of such employment,
stating the full name and address of the individual, the date of commencement and
the terms of employment. (Added 49 of 1956s.38. Amended7of1986s.9)
(5) Where any person who is an employer ceases or is about to cease to
employ in Hong Kong an individual who is or is likely to be chargeable to tax
under Part Ill, or any married woman, he shall give notice thereof in writing to
the Commissioner not later than 1 month before such individual ceases to be
employed in Hong Kong, stating the name and address of the individual and
the expected date of cessation: (Amended 7 of 1986 s. 9)
Provided that the Commissioner may accept such shorter notice as he may
deem reasonable. (Added 49 of 1956 s. 38)
(6) The employer of any individual who is chargeable to tax under Part
111 and is about to leave Hong Kong for any period exceeding 1 month shall
give notice in writing to the Commissioner of the expected date of departure of
such individual. Such notice shall be given not later than 1 month before the
expected date of departure:
Provided that-
(a)the Commissioner may accept such shorter notice as he may
deem reasonable; and





(b)this subsection shall not apply in the case of an individual who is
required in the course of his employment to leave Hong Kong at
frequent intervals. (Added49of]956s.38)
(7) An employer who is required by subsection (6) to give notice to the
Commissioner of the expected departure of an individual shall not, in the case
of an individual whom he has ceased, or is about to cease, to employ in Hong
Kong, except with the consent in writing of the Commissioner or in the case of
money paid to the Commissioner on the direction of the individual, make any
payment of money or money's worth to or for the benefit of the individual for a
period of 1 month from the date on which he gave the notice; and compliance
with this subsection shall constitute a defence in any proceedings against an
employer in respect of his failure to make any payment to or for the benefit of
the individual during the said period. (Added26of]969s.29. Amended2of
1971s.34)
(8) Notwithstanding anything to the contrary in subsections (4) and (5)
an employer shall not---berequired to give notice under those subsections in
respect of a married woman if he has reasonable grounds for believing that
neither the nor her husband are, or are likely to be, chargeable to tax under
Part III. (Added 7 of 1986s.9)
(Amended 7 of 1986 s. 12)

53. Who may act for incapacitated
or non-resident persons

An act or thing required by or under this Ordinance to be done by any
person shall, if such person is an incapacitated or non-resident person, be
deemed to be required to be done by the trustee of such incapacitated person or
by the agent of such non-resident person, as the case may be.

54. Liability of executor of deceased taxpayer

The executor of a deceased person shall be chargeable with the tax for all
periods prior to the date of such person's death with which the said person
would be chargeable if he were alive, and shall be liable to do all such acts,
matters or things as the deceased person if he were alive would be liable to do
under this Ordinance:
Provided that-
(a)no proceedings, other than an assessment to additional tax under
section 82A, shall be instituted against the executor under the
provisions of Part XIV in respect of any act or default of the
deceasedperson; (Amended43of]975s.5)
(b)no assessment or additional assessment in respect of a period
prior to the date of such person's death shall be made after the





expiry of 1 year from such date of death, or 1 year from the date
of filing any affidavit required under the Estate Duty Ordinance
(Cap. 111), whichever is the later.(Amended 26 of 1969 s. 30)

55. (Repealed 49 of 1956 s. 39)

56. Precedent partner to act on behalf of partnership

(1) Wherever 2 or more persons in partnership act as agents, or are
employers, or are persons in receipt of profits or act in any other capacity
whatever, either on behalf of themselves or of any other person, the precedent
partner of such partnership shall be answerable for doing all such acts, matters
and things as would be required to be done under the provisions of this
Ordinance by an individual acting in such capacity: (Amended 49 of 1956
s.40)
Provided that any person to whom a notice has been given under the
provisions of this Ordinance as precedent partner of a partnership shall be
deemed to be the precedent partner thereof unless he proves that he is not a
partner in such partnership, or that some other person resident in Hong Kong
is the precedent partner thereof. (Amended 7 of 1986 s. 12)
(2) Where 2 or more persons who are not in partnership act jointly in
any capacity mentioned in subsection (1), they shall be jointly and severally
answerable for doing all such acts, matters, and things as would be required to
be done under the provisions of this Ordinance by an individual acting in such
capacity.

56A. Joint owners and co-owners

(1) Where 2 or more persons are joint owners or owners in common of
any land or buildings or land and buildings, any of those persons appearing
from any deed, conveyance, will, judgment or other instrument in writing
registered in the Land Office under the Land Registration Ordinance (Cap. 128)
to be such an owner shall be answerable for doing all such acts, matters and
things as would be required to be done under the provisions of this Ordinance
by a sole owner.
(2) Nothing in subsection (1) shall relieve any person of any obligation
under this Ordinance or affect any right and obligation of joint owners or
owners in common as between themselves.
(3) Where any person pays property tax under subsection (1) and that
person is not, apart from that subsection, liable to that tax or part of it, that
person may recover from any other person that tax or part of it to which that
other person, apart from that subsection, is liable under this Ordinance.
(Added 8 of 1983 s. 16)





57. Principal officer to act on behalf of
a corporation or body of persons
(1) The secretary, manager, any director or the liquidator of a
corporation and the principal officer of a body of persons shall be answerable
for doing all such acts, matters, or things as are required to be done under the
provisions of this Ordinance by such corporation or body of persons.
(2) If no secretary, manager, director or liquidator of a corporation or
no principal officer of a body of persons is ordinarily resident in Hong Kong,
the corporation or body of persons, as the case may be, shall inform the
Commissioner, and keep him so informed at all times, of the name and address
of an individual ordinarily resident in Hong Kong who shall be answerable
for doing all such acts, matters, or things as are required to be done under
the provisions of this Ordinance by such corporation or body of persons.
(Amended 7 of 1986 s. 12)
(Replaced 2 of 1971 s. 35)

58. Signature and service of notices
(1) Every notice to be given by the Commissioner, an assistant
commissioner, an assessor or an inspector under this Ordinance shall bear the
name of the Commissioner, assistant commissioner, assessor or inspector,
as the case may be, and every such notice shall be valid if the name of the
Commissioner, assistant commissioner, assessor or inspector is duly printed or
signedthereon. (Replaced 26 of 1969 s.31)
(2) Every notice given by virtue of this Ordinance may be served on a
person either personally or by being delivered at, or sent by post to, his last
known postal address, place of abode, business or employment or any place at
which he is, or was during the year to which the notice relates, employed or
carrying on business or the land or buildings or land and buildings in respect of
which he is chargeable to tax under Part II: (Amended 49 of 1956 s. 42; 26 of
1969 s. 31; 8 of 1983 s. 17)
Provided that a notice of assessment under section 62 shall be served
personally or by being sent by registered post (or in the case of an assessment to
property tax under Part II either by registered post or by ordinary post) to any
such place as aforesaid. (Replaced 30 of 1950 Schedule)
(3) Any notice sent by post shall be deemed to have been served on the
day succeeding the day on which it would have been received in the ordinary
course by post.
(4) In proving service by post it shall be sufficient to prove that the letter
containing the notice was duly addressed and posted.
(5) Every name printed or signed on any notice or signed on any
certificate given or issued for the purposes of this Ordinance which purports to
be the name of the person authorized to give or issue the same shall be judicially
noticed.





(6) If a notice given under this Part requires something to be done within
a time stated in the notice, the Commissioner or, in the case of a notice given by
an assessor, an assessor may by notice in writing extend the time for complying
with the notice. (Added 2 of 1971 s. 36)

58A. Election by spouses to be separately charged

(1) A husband and wife may elect to be separately charged in respect of
any year of assessment for the purposes of section 13(2), 43(2C) or 63C(1A) but
such an election-
(a) shall not be entertained unless it is-
(i) made for that year assessment in a return specified by the
Board of Inland Revenue for the purposes of section 51(1);
and
(ii) so made by both spouses jointly in the same return;
(b) shall be irrevocable; and
(c)shall have effect for all purposes for which such an election may
be, or could have been, made under this Ordinance for that year
of assessment.
(2) Where spouse is deceased a duly appointed executor shall, subject to
subsection (1), have the same right to elect on behalf of the deceased to be
separately charged as the deceased would have had if the deceased were alive.
(Added 71 of 1983 s. 28)

PART X

ASSESSMENTS

59. Assessor to make assessments

(1) Every person who is in the opinion of an assessor chargeable with tax
under this Ordinance shall be assessed by him as soon as may be after the
expiration of the time limited by the notice requiring him to furnish a return
under section 5 1 (1):
Provided that the assessor may assess any person at any time if he is of
opinion that such person is about to leave Hong Kong, or that for any other
reason it is expedient to do so. (Amended 7 of 1986 s. 12)
(IA) Notwithstanding subsection (1), where an assessor is of the opinion
that an election by an individual under section 41 for personal assessment on
his total income would result in a refund becoming due of the whole of the
amount which he might lawfully be assessed for property tax if such amount
were paid, the assessor shall not be obliged to proceed to make an assessment in
respect of that tax.(Added 26 of 1969 s. 32)





(1B) Notwithstanding subsection (1), where an assessor is satisfied that-
(a)an individual on his wife, not being a wife living apart from her
husband, carries on (not jointly with another person) a trade,
profession or business in Hong Kong and the individual is
eligible to elect under section 41 for personal assessment on his
total income; and
(b)the assessable profits of that individual in respect of his trade,
profession or business in Hong Kong for any year of assessment
do not exceed 539,000; and (Amended 32 of 1981 s. 8; 29 of
1982 s. 13; 28 of 1987 s. 6; 28 of 1988 s. 5; 17 of 1989 s. 15)
(c) the individual, and his wife, not being a wife living apart from her
husband, has no income, property, or profits chargeable to tax
under this Ordinance for that year of assessment, other than in
respect of such trade, profession or business,
the assessor shall not be obliged to proceed to make an assessment of profits tax
in respect of such assessable profits. (Added 2 of 1971 s. 37. Amended 7 of
1975 s. 35; 7 of 1986 s. 12)
(1C) Notwithstanding subsection (1), where an assessor is satisfied that-
(a)an individual or his wife, not being a wife living apart from her
husband, carries , on a trade, profession or business in Hong
Kong, either solely or jointly with another person, and the
individual is eligible to elect under section 41 for personal
assessment on his total income; and (Amended 7 of 1986 s. 12)
(b) the individual, and his wife, not being a wife living apart from her
husband, has no Iricome, property or profits chargeable to tax
under this Ordinance for any year of assessment, other than in
respect of such trade, profession or businesI and
(c) the assessable profits of the individual or his wife, not being a
wife living apart from her husband, in respect of such trade,
profession or business for such year of assessment, or his or her
share of those profits if he or she is a partner in the trade,
profession or business, are such that if there were an election for
personal assessment under section 41 and after taking into
account the allowances that would have to be deducted under
section 42B, no tax would be charged on either of them,
(Replaced 71 of 1983 s. 29)
the assessor shall not be obliged to proceed to make an assessment of profits tax
in respect of such assessable profits and, if he has made such an assessment, he
may notwithstanding section 70, annul the assessment or in case of assessment
of a partnership may reduce it insofar as it relates to the share of profits of such
individual or wife. (Added2of]97]s.37. Amended71 of 1983s. 29)
(2) Where a person has furnished a return in accordance with the
provisions of section 51 the assessor may either- (Amended 49 of 1956 s. 43)





(a) accept the return and make an assessment accordingly; or
(b)if he does not accept the return, estimate the sum in respect of
which such person is chargeable to tax and make an assessment
accordingly; or (Amended 49 of 1956 s. 43)
(e)in relation to the years of assessment up to and including the year
of assessment commencing on 1 April 1974, if he accepts the
return as substantially correct but considers it necessary to make
further inquiries on any matter, make immediately a provisional
assessment in the amount of the return. (Added2of]97]s.37.
Amended 7 of 1975 s. 35)
(3) Where a person has not furnished a return and the assessor is of the
opinion that such person is chargeable with tax, he may estimate the sum in
respect of which such person is chargeable to tax and make an assessment
accordingly, but such assessment shall not affect the liability of such person to a
penalty by reason of his failure or neglect to deliver a return. (Amended 49 of
1956s.43)
(4) In the case of profits from a trade or business, if accounts of such
trade or business have not been kept in a satisfactory form, the assessor may
assess the profits or income of such trade or business on the basis of the usual
rate of net profit on the turnover of such trade or business, and the Board of
Inland Revenue may prescribe the amounts of such usual rates of profits in
particular classes of trade or business.

59A. Provisional assessments
(1) A provisional assessment under section 59(2)(c) shall be a valid
assessment for all purposes except that section 64(1) shall not apply unless the
provisional assessment is confirmed under section 62(2).
(2) Where it appears to an assessor that a provisional assessment which
has not been confirmed under section 62(2) should be increased or reduced for
any year of assessment, the assessor may, in place of such provisional
assessment, within the year of assessment or within 6 years after the expiration
thereof, assess the person assessed at the amount at which according to his
judgment such person ought to have been assessed:
Provided that where the under-assessment of any person in a provisional
assessment for any year of assessment is due to fraud or wilful evasion, the
assessment under this subsection may be made at any time within 10 years after
the expiration of that year of assessment.
(Added 2 of 1971 s. 38)

60. Additional assessments
(1) Where it appears to an assessor that for any year of assessment any
person chargeable with tax has not been assessed or has been assessed at less





than the proper amount, the assessor may, within the year of assessment or
within 6 years after the expiration thereof, assess such person at the amount or
additional amount at which according to his judgment such person ought to
have been assessed, and the provisions of this Ordinance as to notice of
assessment, appeal and other proceedings shall apply to such assessment or
additional assessment and to the tax charged thereunder: (Amended 16 of
1951 s. 10; 49 of 1956 s. 44)
Provided that-
(a) (Repealed 2 of 1971 s. 39)
(b)where the non-assessment or under-assessment of any person for
any year of assessment is due to fraud or wilful evasion, such
assessment or additional assessment may be made at any time
within 10 years after the expiration of that year of assessment.
(Amended 49 of 1956 s. 44)
(2) Where it appears to an assessor that the whole or part of any tax
repaid to a person (otherwise than in consequence of an assessment having been
determined on objection or appeal) has been repaid by mistake, whether of fact
or law, the assessor may, within the year of assessment to which the repayment
relates or within 6 years after the expiration thereof, assess such person in the
amount of tax so repaid by mistake, and the provisions of this Ordinance as to
notice ' of assessment, objection, appeal and other proceedings shall apply to
such assessment and to the tax charged thereunder. (Added2of]97]s.39)
(3) No assessment shall be made under subsection (2) if the repayment
was in fact made on the basis of, or in accordance with, the practice generally
prevailing at the time when the repayment was made. (Added2of]97]s.39)

61. Certain transactions and dispositions
to he disregarded
Where an assessor is of opinion that any transaction which reduces or
would reduce the amount of tax payable by any person is artificial or fictitious
or that any disposition is not in fact given effect to, he may disregard any
such transaction or disposition and the person concerned shall be assessable
accordingly.

61A. Transactions designed to avoid Hability for tax
(1) This section shall apply where any transaction has been entered into
or effected after the commencement of the Inland Revenue (Amendment)
Ordinance 1986 (7 of 1986) (other than a transaction in pursuance of a
legally enforceable obligation incurred prior to such commencement) and that
transaction has, or would have had but for this section, the effect of conferring
a tax benefit on a person (in this section referred to as 'the relevant person'),
and, having regard to-





(a)the manner in which the transaction was entered into or carried
out;
(b) the form and substance of the transaction;
(c)the result in relation to the operation of this Ordinance that, but
for this section, would have been achieved by the transaction;
(d)any change in the financial position of the relevant person that
has resulted, will result, or may reasonably be expected to result,
from the transaction;
(e)any change in the financial position of any person who has, or
has had, any connection (whether of a business, family or other
nature) with the relevant person, being a change that has resulted
or may reasonably be expected to result from the transaction;
(f) whether the transaction has created rights or obligations which
would not normally be created between persons dealing with each
other at arm's length under a transaction of the kind in question;
and
(g)the participation in the transaction of a corporation resident or
carrying on business outside Hong Kong,
it would be concluded that the person, or one of the persons, who entered into
or carried out the transaction, did so for the sole or dominant purpose of
enabling the relevant person, either alone or in conjunction with other persons,
to obtain a tax benefit.
(2) Where subsection (1) applies, the powers conferred upon an assessor
under Part X shall be exercised by an assistant commissioner, and such assistant
commissioner shall, without derogation from the powers which he may exercise
under that Part, assess the liability to tax of the relevant person-
(a)as if the transaction or any part thereof had not been entered into
or carried out; or
(b) in such other manner as the assistant commissioner considers
appropriate to counteract the tax benefit which would otherwise
be obtained.
(3) In this section-
'tax benefit' means the avoidance or postponement of the liability to pay tax or
the reduction in the amount thereof;
'transaction' includes a transaction, operation or scheme whether or not
such transaction, operation or scheme is enforceable, or intended to be
enforceable, by legal proceedings.
(Added 7 of 1986 s. 10)

61B. Utilization of losses to avoid tax
Where the Commissioner is satisfied that-
(a)any change in the shareholding in any corporation, as a direct or
indirect result of which profits have been received by or accrued





to that corporation during any year of assessment, has been
effected by any person after the commencement of the Inland
Revenue (Amendment) Ordinance 1986 (7 of 1986); and
(b)the sole or dominant purpose of the change was for the purpose
of utilizing any loss or any balance of any loss sustained in a
trade, profession or business carried on by the corporation, in
order to avoid liability on the part of that corporation or any
other person for the payment of any tax or to reduce the amount
thereof,
the set off of any such loss or balance of loss against any such profits shall be
disallowed.
(Added 7 of 1986 s. 10)

62. Notice to he issued by Commissioner

(1) The Commissioner shall give a notice of assessment to each person
who has been assessed stating the amount assessed, the amount of tax charged,
and such due date for payment thereof as may be fixed by the Commissioner.
(Amended 2 of 1971 s. 40)
(2) Where the assessment is a provisional assessment made under section
59(2) the person assessed shall be notified accordingly by the Commissioner,
and he shall further be notified in due course by the Commissioner if
such provisional assessment is confirmed. The confirmation of a provisional
assessment shall not preclude the making of an additional assessment
subsequently under section 60.
(3) Where by reason of an amendment of the law it is necessary to vary
the amount of tax charged in any notice of assessment the Commissioner may
give such notification as may be necessary to the person assessed in that notice
of assessment, and any notification so given shall, as regards any particulars of
the assessment contained in the notification which have not been included in
the notice of assessment, have effect as if the notification were a notice of
assessment.
(Amended 35 of 1965 s. 27)

63. Validity of assessments, etc.

No notice, assessment, certificate, or other proceeding purporting to be in
accordance with the provisions of this Ordinance shall be quashed, or deemed
to be void or voidable, for want of form, or be affected by reason of a mistake,
defect, or omission therein, if the same is in substance and effect in conformity
with or according to the intent and meaning of this Ordinance, and if the
person assessed or intended to be assessed or affected thereby is designated
therein according to common intent and understanding.





63A. Appointment of agent in the United Kingdom

For the purposes of facilitating the assessment of the income or profits of a
person residing in the United Kingdom the Governor may appoint an agent in
the United Kingdom who may exercise in respect of any United Kingdom
resident who may apply to be dealt with through him all the powers conferred
by this Ordinance on an assistant commissioner. The agent appointed under
this section shall report to the Commissioner the amount of the assessable
income or profits of any such person ascertained in accordance with the
provisions of this Ordinance and shall forward to the Commissioner the
accounts and computations upon which his assessment is based:
Provided that nothing in this section shall affect the right of objection or
appeal under Part Xl. (Amended 35 of 1965 s. 28)
(Added 49 of 1956 s. 45)

PART XA

PRovisioNAL SALARiEs TAx

63B. Liability for provisional salaries tax

(1) Every person who is chargeable to salaries tax under Part III in
respect of any year of assessment shall be liable to pay provisional salaries tax
in respect of that year of assessment in accordance with this Part.
(2) In the case of a husband and wife, not being a wife living apart from
her husband-
(a) provisional salaries tax shall be payable on their net chargeable
income adjusted as necessary under section 63C(1); and
(b) the husband shall, subject to section 63C(1A), be solely liable to
pay that provisional salaries tax.
(Replaced 71 of 1983 s. 30)

63C. Amount of provisional salaries tax

(1) Subject to subsections (2) and (3), provisional salaries tax in respect of
any year of assessment shall be payable at the rates specified in Schedule 2 for
that year of assessment by reference to the amount of the net chargeable income
for the preceding year of assessment adjusted, for the purposes of this section,
as follows-
(a)any loss set off under section 12A in calculating the net assessable
income, or net assessable incomes, on which that net chargeable
income is based, shall be added; (Amended 71 of 1983
s. 31 (a) (i))





(b)any loss which may be set ofT under section 12A in the year of
assessment shall be set off against that amount:
Provided that-
(i) in respect of the year of assessment up to and including the year
of assessment commencing on 1 April 1984, in no case shall the
amount of provisional salaries tax charged on any person
under this subsection exceed the amount which would have
been chargeable on him had the standard rate for the year of
assessment been charged on the whole of his assessable income
for the preceding year of assessment as reduced by the outgoings,
expenses and allowances provided for in section 12(1) and any
excess set off under section 12A; and
(ii) in respect of the year of assessment commencing on 1 April 1985
and subsequent years of assessment, in no case shall the amount
of provisional salaries tax charged under this subsection exceed
the amount which would have been chargeable had the standard
rate been charged on the whole of-
(A)the net assessable income for the preceding year of
assessment as reduced by approved charitable donations
provided for under section 12BA; or
(B) in the case of a husband and wife, not being a wife living
apart from her husband, the aggregate of their net assessable
incomes for the preceding year of assessment as reduced by
approved charitable donations provided for under section
17BA. (Replaced 71 of 1983 s. 31)
(1A) Where a husband and wife have; under section 58A, elected to be
separately charged in respect of a year of assessment, the amount of provisional
salaries tax payable, under subsection (1)-
(a)shall, if that year of assessment commences on 1 April 1984, be
apportioned between them so that -
(i) the wife shall be charged such proportion of the
provisional salaries tax as, in the year of assessment
commencing on 1 April 1983, her income bore to their
combined income, disregarding for these purposes the
effect of amendments made to this Ordinance by the
Inland Revenue (Amendment) (No. 5) Ordinance 1983 (71
of 1983); and
(ii) the husband shall be charged the balance of the provisional
salaries tax; and
(b) shall, if that year of assessment commences on or after 1 April
1985, be apportioned between them so that each spouse shall
be charged such proportion of the provisional salaries tax as the
net assessable income of that spouse in the preceding year of





assessment bore to tbe aggregate of their net assessable incomes
in that preceding year. (Added 71 of 1983 s. 31)
(IB) For the purpose of calculating net chargeable income under
subsection (1) in order to ascertain provisional salaries tax for the year of
assessment commencing on 1 April 1989 the references in section 12B(I)(b) and
(2)(b) to section 4213(1) shall be read as references to section 4213(1) as amended
by the Inland Revenue (Amendment) (No. 2) Ordinance 1989 (17 of 1989).
(Section 22(2) of 17 of 1989 incorporated)
(2) If a person commences to derive income from a source on a day
within any year of assessment, an assessor may estimate the sum in respect of
which provisional salaries tax is payable in that year and the succeeding year of
assessment. (Amended 71 of 1983 s. 31)
(3) If a person ceases to derive income from a source within any year of
assessment an assessor may estimate the sum in respect of which provisional
salaries tax is payable for that year of assessment and for the year preceding
that year of assessment. (Amended 71 of 1983 s. 31)
(4) If a person is liable to pay provisional salaries tax, an assessor shall, as
soon as may be after the expiration of the time limited by the notice requiring
that person to furnish a return under section 51(1), assess or estimate the
amount of the provisional salaries tax which he is liable to pay.
(5) Notwithstanding subsection (4), an assessor may assess or estimate the
airnount of provisional salaries tax which any person is liable to pay if he is of
the opinion that the person is about to leave Hong Kong or that for any other
reason it is expedient to do so. (Amended 7 of 1986 s. 12)
(6) When an assessor has assessed or estimated the amount of provisional
salaries tax which a person is liable to pay, the Commissioner shall give a notice
to that person stating the amount of provisional salaries tax to be paid, and
such due date for payment thereof as may be fixed by the Commissioner.
(6A) Where in any year of assessment a notice for payment of provisional
salaries tax has been given under subsection (6) an any rate specified
in Schedule 2, or any allowance provided for in section 42B, for that year of
assessment is amended, the amount of provisional salaries tax stated in the
notice shall nevertheless be payable. (Added32of]98]s.9)
(7) For the purposes of Part XII, provisional salaries tax shall be deemed
to be a tax charged under the provisions of this Ordinance and a notice under
subsection (6) shall be deemed to be a notice of assessment.
(Added 8 of 1973s. 13. Amended 7 of 1975s.36)

63D. Demands for provisional salaries tax
(1) In any year of assessment, a notice for payment of provisional salaries
tax may be-
(a)given separately to any person liable to pay provisional salaries
tax; or





(b)included in a notice of assessment to salaries tax. (Amended 7 of
1975s.37)
(2) (Repealed 7 of 1975 s. 37)
(Added 8 of 1973 s. 13)

63E. Holding over of payment of
provisional salaries tax

(1) Where, in relation to any year of assessment, a person is liable to pay
provisional salaries tax, he may subject to subsection (5), by notice in writing
lodged with the Commissioner 14 days before the day by which
the provisional salaries tax is to be paid, apply to the Commissioner on any of
the grounds specified in subsection (2) to have the payment of the whole or part
of such tax held over until he is required to pay salaries tax for that year
of assessment or, in the case of an application on the ground set out in sub-
section (2)(d), until-
(a)the determination of the objection or settlement thereof under
section 64(3);
(b) he is required to pay salaries tax for that year of assessment,
whichever is the sooner. (Amended 7 of 1975 s. 38; 71 of 1983 s. 32)
(2) The grounds referred to in subsection (1) are-
(a)that the person assessed to provisional salaries tax has become
entitled during the year of assessment to an allowance under
section 42B(1)(b),(c) or (d), which allowance was not taken into
account in the ascertainment of his net chargeable income for the
year preceding the year of assessment or in estimating the sum in
respect of which such person is liable to pay provisional salaries
tax; (Amended33of 1973s. 4; 79of 1978s. 3)
(b)that the net chargeable income during the year of assessment of
the person assessed to provisional salaries tax is, or is likely to be,
less than 90% of the net chargeable income for the year preceding
the year of assessment or of the estimated sum in respect of which
such person is liable to pay provisional salaries tax; (Amended
7 of 1975 s. 38)
(c)that the person assessed to provisional salaries tax has ceased, or
will before the end of the year of assessment cease, to derive
income chargeable to salaries tax; or
(d)that the person assessed to provisional salaries tax has objected
under section 64 to his assessment to salaries tax for the year
preceding the year of assessment. (Added 7 of 1975 s. 38)
(3) On receipt of an application under subsection (1), the Commissioner
shall consider the same and may hold over the payment of the whole or part of
the provisional salaries tax.





(4) The Commissioner shall, by notice in writing, inform the person
applying under subsection (1) of his decision.
(5) In the case of a husband and wife who elect under section 58A to be
separately charged in respect of any year of assessment-
(a) an application under subsection (1) to have payment of
provisional salaries tax held over shall not be entertained unless it
is made by both spouses jointly; and
(b)any provisional salaries tax held over by the Commissioner shall,
as between the spouses, be held over in such proportions as he
think fit. (Added 71 of 1983 s. 32)
(Added 8 of 1973 s. 13)

63F. Provisional salaries tax to he
applied against salaries tax

(1) When any person had paid provisional salaries tax in respect of any
year of assessment, the Commissioner shall, not later than when he gives notice
of assessment of salaries tax, apply the amount of provisional salaries tax so
paid in payment first of-
(a)the salaries tax payable by that person for that year of
assessment; then
(b)the provisional salaries tax payable in respect of the year of
assessment succeeding that year of assessment,
and shall refund to the person paying the provisional salaries tax the amount of
the provisional salaries tax not so applied. (Replaced 7 of 1975 s. 39)
(2) If at any time in any year of assessment a person was married to a wife
whose net assessable income was required to be aggregated with that of her
husband for the purpose of calculating their net chargeable income under
section 12B(2), any provisional salaries tax paid by the wife in respect of that
income shall be applied by the Commissioner in payment of the salaries tax
payable by the person for the year of assessment in which the marriage took
place, unless the husband and wife have elected under section 58A to be
separately charged in respect of that year of assessment, in which case any
provisional salaries tax so paid shall be applied in payment of the salaries tax
payable by the wife under section 13(2) as a result of the election. (Amended
71 of 1983 s. 33)
(Added 8 of 1973 s. 13)

PART XB

PROVISIONAL PROFITS TAX

63G. Liability for provisional profits tax

Every person who is chargeable to profits tax under Part IV in respect of
the year of assessment commencing on 1 April 1975 or any succeeding year of





assessment shall be liable to pay provisional profits tax in respect of that year of
assessment in accordance with this Part.
(Added 7 of 1975 s. 40)

6311. Ainount of provisional profits tax
(1) Subject to subsections (2), (3) and (4), provisional profits tax in
respect of any year of assessment shall be payable at the standard rate by
reference to the amount of assessable profits for the year preceding the year of
assessment, but after the set off of any loss available for set off in the year of
assessment under section 19 or 19C
Provided that, in the case of a corporation, provisional profits tax shall be
payable-
(a)for the year of assessment commencing on 1 April 1975, at the
rate of 161%;
2
(b)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, at the rate of 17 %;
(c)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, at the rate of 161%;
(Replaced 32 of 1981 s. 10. Amended36of 1984s. 6; 28 of 1987
s.7)
(d)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, at the rate of 181 %;
2
(Added36 of 1984s. 6. Amended28of 1987s. 7,-28 of 1988s.6)
(e) for the year of assessment commencing on 1 April 1987, at the
rateof18%; (Added28of 1987s. 7. Amended28of 1988s.6;
17 of 1989 s. 16)
(f)for the year of assessment commencing on 1 April 1988, at the
rate of 17%; and (Added 28 of 1988 s. 6. Amended 17 of 1989
s.16)
(g)for the year of assessment commencing on 1 April 1989 and all
subsequent years of assessment, at the rate of 161 %. (Added 17
2
of 1989 s. 16)
(2) In calculating any assessable profits for a year preceding a year of
assessment for the purposes of computing provisional profits tax under
subsection (1), there shall be disregarded any loss available for set off in that
year.
(3) Where the amount of assessable profits of a person for the year
preceding the year of assessment was calculated on a basis period of more or
less than 1 year, an assessor may estimate the sum in respect of which such
person is liable to pay provisional profits tax in that year of assessment.





(4) If a person commences to carry on a trade, profession or business in
Hong Kong on a day within. a year of assessment commencing on or after 1
April 1974, an assessor may estimate the sum in respect of which such person is
liable to pay provisional profits tax in that year and the succeeding year of
assessment. (Amended 7 of 1986 s. 12)
(5) If a person is liable to pay provisional profits tax, an assessor shall, as
soon as may be after the expiration of the time limited by the notice requiring
that person to furnish a return under section 51(1), assess or estimate the
amount of provisional profits tax which he is liable to pay.
(6) Notwithstanding subsection (5), an assessor may assess or estimate the
amount of provisional profits tax which any person is liable to pay if he is of the
opinion that the person is about to leave Hong Kong or that for any other
reason it is expedient to do so. (Amended 7 of 1986 s. 12)
(7) When an assessor has assessed or estimated the amount of provisional
profits tax which a person is liable to pay, the Commissioner shall give a notice
to that person stating the amount of provisional profits tax to be paid, and such
due date for payment thereof as may be fixed by the Commissioner.
(7A) Where in any year of assessment a notice for payment of provisional
profits tax has been given under subsection (7) and thereafter the rate of
provisional tax for that year of assessment is amended, the amount of
provisional profits tax stated in the notice shall nevertheless be payable.
(Added 32 of 1981 s. 10)
(8) For the purposes of Part XII, provisional profits tax shall be deemed
to be a tax charged under this Ordinance and a notice under subsection (7) shall
be deemed to be a notice of assessment.
(Added 7 of 1975 s. 40)

631. Demands for provisional profits tax
In any year of assessment, a notice for payment of provisional profits tax
may bc---
(a)given separately to the person liable to pay that provisional
profits tax; or
(b) included in a notice of assessment to profits tax.
(Added 7 of 1975 s. 40)

63J. Holding over of payment of provisional profits tax
(1) Where in relation to any year of assessment a person is liable to
pay provisional profits tax, he may, by notice in writing lodged with the
Commissioner not later than 14 days before the day by which the provisional
profits tax is to be paid, apply to the Commissioner on any of the grounds
specified in subsection (2) to have the payment of the whole or part of such tax
held over until he is required to pay profits tax for that year of assessment or, in
the case of an application on the ground set out in subsection (2)(e), until-





(a)the determination of the objection or settlement thereof under
section 64(3); or
(b) he is required to pay profits tax for that year of assessment,
whichever is the sooner.
(2) The grounds referred to in subsection (1) are-
(a)that the assessable profits for the year of assessment of the person
assessed to provisional profits tax are, or are likely to be, less
than 90% of the assessable profits for the year preceding the year
of assessment or of the estimated sum in respect of which the
person is liable to pay provisional profits tax;
(b)that the amount of any loss brought forward for set ofr to that
year of assessment under section 19 or 19C has been omitted or is
incorrect;
(c)that the person assessed to provisional profits tax has ceased, or
will before the end of the year of assessment cease, to carry on his
trade, profession or business and that the assessable profits to be
assessed under section 18D for that year of assessment are, or are
likely to be, less than the assessable profits for the year preceding
the year of assessment or of the estimated sum in respect of which
the person is liable to pay provisional profits tax;
(d)that the person assessed to provisional profits tax has elected or is
deemed to have elected to be personally assessed under Part VII
for that year of assessment and that such personal assessment is
likely to reduce his liability to tax; or
(e)that the person assessed to provisional profits tax has objected
under section 64 to his assessment to profits tax for the year
preceding the year of assessment.
(3) On receipt of an application under subsection (1), the Commissioner
shall consider the same and may hold over the payment of the whole or part of
the provisional profits tax.
(4) The Commissioner shall, by notice in writing, inform the person
applying under subsection (1) of his decision.
(Added 7 of 1975 s. 40)

63K. Provisional profits tax to be
applied against profits tax

When any person has paid provisional profits tax in respect of any year of
assessment, the Commissioner shall, not later than when he gives notice of
assessment of profits tax, apply the amount of provisional profits tax so paid in
payment first of-
(a)the profits tax payable by that person for that year of assessment;
then





(b)the provisional profits tax payable in respect of the year of
assessment succeeding that year of assessment,
and shall refund to the person paying the provisional profits tax the amount
thereof not so applied.
(Added 7 of 1975 s. 40)

PART XC

PROVISIONAL PROPERTY TAx

63L. Liability for provisional property tax

Every person who is chargeable to property tax under Part 11 in respect of
any year of assessment commencing on or after 1 April 1983 shall be liable to
pay provisional property tax in respect of that year of assessment in accordance
with this Part.
(Added 8 of 1983 s. 18)

63M. Amount of provisional property tax

(1) Provisional property tax in respect of any year of assessment shall be
payable at the standard rate on the net assessable value of land or buildings of
land and buildings for the year preceding the year of assessment.
(2) Where the amount of assessable value of land or buildings or land and
buildings for the year preceding the year of assessment was calculated in respect
of a period of less than one year, an assessor may estimate the assessable value
in respect of which provisional property tax is payable.
(3) Where a person becomes chargeable to property tax during a year of
assessment, an assessor may estimate the assessable value in respect of which
provisional property tax is payable in that year and the succeeding year of
assessment.
(4) Where a person is liable to pay provisional property tax, an assessor
shall, as soon as may be after expiration of the time limited by the notice
requiring that person to furnish a return under section 51(1), assess or estimate
the amount of provisional property tax which he is liable to pay.
(5) Notwithstanding subsection (4), an assessor may assess or estimate the
amount of provisional property tax which any person is liable to pay if he is of
the opinion that the person is about to leave Hong Kong or that for any other
reason it is expedient to do so.
(6) When an assessor has assessed or estimated the amount of provisional
property tax which a person is liable to pay, the Commissioner shall give a
notice to that person stating the amount of provisional property tax to be paid,
and such due date for payment thereof as may be fixed by the Commissioner.





(7) Where in any year of assessment a notice for payment of provisional
property tax has been given under subsection (6) and thereafter the allowance
mentioned in section 5(1A) or the rate of provisional property tax for that year
of assessment is amended, the amount of provisional property tax stated in the
notice shall nevertheless be payable.
(8) For the purposes of Part XII, provisional property tax shall be
deemed to be a tax charged under this Ordinance and a notice under subsection
(7) shall be deemed to be a notice of assessment.
(Added 8 of 1983 s. 18)

63N. Demands for provisional property tax

In any year of assessment, a notice for payment of provisional property tax
may be-
(a) given separately to the person liable to pay that provisional
1 property tax; or
(b) included in a notice of assessment to property tax.
(Added 8 of 1983 s. 18)

630. Holding over of payment of
provisional property tax

(1) Where in relation to any year of assessment a person is liable to pay
provisional property tax, he may, by notice in writing lodged with the
Commissioner not later than 28 days before the day by which the provisional
property tax is to be paid, apply to the Commissioner on any of the grounds
specified in subsection (2) to have the payment of the whole or part of such tax
held over until he is required to pay property tax for that year of assessment or,
in the case of an application on the ground set out in subsection (2)(d), until-
(a)the determination of the objection or settlement thereof under
section 64(3); or
(b) he is required to pay property tax for that year of assessment,
whichever is the sooner.
(2) The grounds referred to in subsection (1) are-
(a)that the assessable value for the year of assessment is, or is likely
to be, less than 90% of the assessable value for the year preceding
the year of assessment or of the estimated assessable value in
respect of which the person is liable to pay provisional property
tax;
(b)that the person assessed to provisional property tax has ceased,
or will before the end of the year of assessment cease, to be an
owner of land or buildings or land and buildings and that the
assessable value for the year of assessment is, or is likely to be,





less than the assessable value for the year preceding the year of
assessment or the estimated sum in respect of which the person is
liable to pay provisional property tax;
(c)that the person assessed to provisional property tax has elected or
is deemed to have elected to be personally assessed under Part
VII for that year of assessment and that such personal assessment
is likely to reduce his liability to tax; or
(d)that the person assessed to provisional property tax has objected
under section 64 to his assessment to property tax for the year
preceding the year of assessment.
(3) On receipt of an application under subsection (1), the Commissioner
shall consider the same and may hold over the payment of the whole or part of
the provisional property tax.
(4) The Commissioner shall, by notice in writing, inform the person
applying under subsection (1) of his decision.
(Added 8 of 1983 s. 18)

63P. Provisional property tax to he
applied against property tax

When any person has paid provisional property tax in respect of any year
of assessment, the Commissioner shall, not later than when he gives notice of
assessment of property tax, apply the amount of provisional property tax so
paid in payment first of-
(a)the property tax payable by that person for that year of
assessment; then
(b)the provisional property tax payable in respect of the year of
assessment succeeding that year of assessment,
and shall refund to the person paying the provisional property tax the amount
thereof not so applied.
(Added 8 of 1983 s. 18)

PART XI

OBJECTIONS AND APPEALS
(Amended 26 of 1969 s. 33)

64. Objections

(1) Any person aggrieved by an assessment made under this Ordinance
may, by notice in writing to the Commissioner, object to the assessment; but no
such notice shall be valid unless it states precisely the grounds of objection to
the assessment and, in the case of an assessment other than a provisional





assessment, is received by the Commissioner within 1 month after the date
of the notice of assessment or, in the case of a provisional assessment, within
1 month after the date of the notice under section 62(2) confirming such
assessment: (Amended2of]97]s.41)
Provided that-
(a)if the Commissioner is satisfied that owing to absence from Hong
Kong, sickness or other reasonable cause, the person objecting to
the assessment was prevented from giving such notice within such
period, the Commissioner shall extend the period as may be
reasonable in the circumstances; (Amended 7 of 1986 s. 12)
(b)where any assessment objected to has been made under section
59(3) in the absence of any return required under section 51, no
notice of objection against such assessment shall be valid unless,
in addition to such notice being valid in accordance with the
foregoing provisions of this subsection, the return required as
aforesaid has been made within the period provided by this
subsection for objecting to the assessment or within such further
period as the Commissioner may approve for the making of such
return;
(c)where the assessment is a reassessment of the tax due from a
person having the effect of either increasing or reducing that
person's liability to tax, the person so reassessed shall have no
further right of objection than he would have had if the
reassessment had not been made except to the extent to which, by
reason of the reassessment, a fresh liability in respect of any
particular is imposed on him or an existing liability in respect of
any particular is increased or reduced. (Replaced 2 of 1971
s.41)
(2) On receipt of a valid notice of objection under subsection (1) the
Commissioner shall consider the same and within a reasonable time may
confirm, reduce, increase or annul the assessment objected to, and for the
purpose of discharging his functions under this subsection may, by notice in
writing, require the person giving the notice of objection to furnish such
particulars as the Commissioner may deem necessary with respect to the
matters which are the subject of the assessment and to produce all books or
other documents in his custody or under his control relating to such matters,
and may summon any person who in his opinion is able to give evidence
respecting the assessment to attend before him and may examine such person
on oath or otherwise. Where the Commissioner proposes to examine any
person on oath under this subsection, he shall, by prior notice in writing, afford
a reasonable opportunity to the person giving the notice of objection or his
authorized representative to be present at such examination.





(3) In the event of the Commissioner agreeing with any person assessed,
who has validly objected to an assessment made upon him, as to the amount at
which such person is liable to be assessed, any necessary adjustment of the
assessment shall be made.
(4) In the event of the Commissioner failing to agree with any person
assessed, who has validly objected to an assessment made upon him, as to the
amount at which such person is liable to be assessed, the Commissioner shall, within
1 month after his determination of the objection, transmit in writing to the person
objecting to the assessment his determination together with the reasons therefor
and a statement of the facts upon which the deterniination was arrived at, and such
person may appeal therefrom to the Board of Review as provided in section 66.
(5) The Commissioner shall for the purpose of this section have the
powers granted under section 4(1)(d), (e), (f) and (g) of the Commissions of
Inquiry Ordinance (Cap. 86), subject to the provisions of section 80 of this
Ordinance. (Amended 26 of 1969 s. 34)
(6) Any person, other than the person giving the notice of objection or his
authorized representative, may be allowed by the Commissioner any reasonable
expenses necessarily incurred by him in attending before the Commissioner
under subsection (2).
(7) No objection by a person to a personal assessment on his total income
under Part VII shall-
(a)extend the time for making any objection under any other
provision of this Ordinance;
(b) make valid any objection which is otherwise invalid; or
(c)authorize the revision of any amount which has been included in
the total income of an individual pursuant to the provisions
of section 42(1), where such amount has been the subject of,
or formed a part of, any assessment made under Part H, 111 or
IV which has become final and conclusive under section 70:
(Amended 17 of 1989 s. 17)
Provided that nothing in this paragraph shall operate to
prevent an objection by an individual on the grounds that an
amount included in the calculation under section 42 of his total
income as a share of the assessable profits or losses of a
partnership has not been ascertained in accordance with section
22A. (Added40 of 1972s. 7. Replaced7of]975s.41)
(8) Where an individual makes an objection in the circumstances
described in the proviso to subsection (7)(c), such objection shall be deemed to
be an objection by all the partners as to the share of assessable profits or losses
ascertained under section 22A and any determination or agreement made under
this section as to such ascertaimnent shall be binding on all the partners.
(Added 7 of 1975 s. 41)
(Replaced 35 of 1965 s. 29)





65. Constitution of the Board of Review

(1) For the purpose of hearing appeals in the manner hereinafter
provided, there shall be a panel for a Board of Review consisting of a chairman
and 10 deputy chairmen, who shall be persons with legal training and
experience, and not more than 150 other members, all of whom shall be
appointed from time to time by the Governor. The members of the panel shall
hold office for a term of 3 years but shall be eligible for reappointment.
(Amended 49 of 1956 s. 48; 35 of 1965 s. 31; 51 of 1969 s. 2; 65 of 1970 s. 9; 32
of 19 77 s. 3; 11 of 1985 s. 4; 4 of 1989 s. 3)
(2) There shall be a clerk to the Board of Review (hereinafter referred to
as the Board) who shall be appointed by the Governor.
(3) (Repealed 49 of 1956 s. 48)
(4) 3 or more members of the panel, one of whom shall always be either
the chairman or a deputy chairman, shall be nominated by the Chief Secretary
and summoned by the clerk to attend meetings of the Board at which appeals
are to be heard. At any such a meeting a quorum shall consist of 3 members.
All matters coming before the Board shall be decided by a majority of votes and
in the case of an equality of votes the chairman or deputy chairman shall have a
second or casting vote. (Amended49ofl956s. 48;65 of 1970s. 9)
(5) At the request of the Chief Secretary, the clerk to the Board shall
summon a meeting of the Board consisting of all the members of the panel
available in Hong Kong. At such a meeting a quorum shall consist of 5
members. (Amended 7 of 1986 s. 12)
(6) The remuneration, if any, of the chairman, deputy chairmen and other
members of the Board and the clerk to the Board shall be determined by the
Governor. (Replaced 49 of 1956 s. 48. Amended65 of 1970s. 9)

66. Right of appeal to the Board of Review

(1) Any person (hereinafter referred to as the appellant) who has validly
objected to an assessment but with whom the Commissioner in considering the
objection has failed to agree may within-
(a)1 month after the transmission to him under section 64(4) of the
Commissioner's written determination together with the reasons
therefor and the statement of facts; or
(b)such further period as the Board may allow under sub-
section (IA),
either himself or by his authorized representative give notice of appeal to the
Board; but no such notice shall be entertained unless it is given in writing to the
clerk to the Board and is accompanied by a copy of the Commissioner's written
determination together with a copy of the reasons therefor and of the statement
of facts and a statement of the grounds of appeal.(Replaced 2 of 1971 s.42)





(IA) If the Board is satisfied that an appellant was prevented by illness or
absence from Hong Kong or other reasonable cause from giving notice of
appeal in accordance with subsection (1)(a), the Board may extend for such
period as it thinks fit the time within which notice of appeal may be given under
subsection (1). This subsection shall apply to an appeal relating to any
assessment in respect of which notice of assessment is given on or after 1 April
1971. (Added2of]97]s.42. Amended 7of 1986s. 12)
(2) The appellant shall at the same time as he gives notice of appeal to the
Board serve on the Commissioner a copy of such notice and of the statement of
the grounds of appeal.
(3) Save with the consent of the Board and on such terms as the Board
may determine, an appellant may not at the hearing of his appeal rely on any
grounds of appeal other than the grounds contained in his statement of grounds
of appeal given in accordance with subsection (1).
(Replaced 35 of 1965 s. 32)

67. Transfer of appeals under section 66 for
hearing and determination by High
Court instead of Board of Review

(1) Where notice of appeal is given to the Board under section 66, the
appellant or the Commissioner may give notice in writing in accordance with
this section that he desires the appeal to be transferred to the High Court:
Provided that if both the appellant and the Commissioner give such notice,
the notice given by the Commissioner shall have no effect and shall be deemed
not to have been given.
(2) A notice under subsection (1) shall, if given by the appellant, be given
to the Commissioner, or, if given by the Commissioner, be given to the
appellant, not later than 21 days after the date on which the notice of appeal is
received by the clerk to the Board, and the person giving such notice shall at the
same time send a copy thereof to the Board.
(3) If the person to whom notice is given under subsection (1) consents
thereto, he shall, not later than 21 days after the date on which the notice is
given, notify his consent in writing to the Board and serve a copy of such
notification on the person giving the notice, and on receipt of such notification
by the Board the clerk to the Board shall transmit the notice of appeal to the
High Court together with the documents delivered to the Board under this
section and section 66(1) in connection with the appeal. (Amended L.N. 262
of 1985)
(4) An appeal in respect of which notice of appeal is transmitted to the
High Court under subsection (3) shall be heard and determined by the High
Court as in all respects an appeal to the High Court against the determination
to which the notice of appeal relates.





(5) The following provisions shall apply in relation to the hearing of an
appeal under this section-
(a)the High Court shall give 14 clear days' notice to the appellant
and the Commissioner of the date fixed for the hearing of the
appeal, and may adjourn the hearing to any other date as the
High Court may deem fit;
(b)the Commissioner shall be entitled to appear and be heard at the
hearing of the appeal;
(c)save with the leave of the High Court and on such terms as to costs
or otherwise as the High Court may order, the appellant shall not at
the hearing of the appeal rely on any grounds of appeal other than
the grounds contained in his statement of grounds of appeal given
with the notice of appeal under section 66(1);
(d)the onus of proving that the assessment appealed against is
excessive or incorrect shall be on the appellant;
(e)the High Court may summon any person appearing to the High
Court to be able to give evidence respecting the appeal to attend
at the hearing of the appeal and may examine any such person as
a witness on oath or otherwise.
(6) An appeal in respect of which notice of appeal is transmitted to the
High Court under subsection (3) shall not be withdrawn without the leave of
the High Court and except on such terms as to costs or otherwise as the High
Court may order.
(7) In determining an appeal under this section, the High Court may-
(a)confirm, reduce, increase or annul the assessment determined by
the Commissioner;
(b)make any assessment which the Commissioner was empowered to
make at the time he determined the assessment, or direct the
Commissioner to make such an assessment, in which case an
assessment shall be made by the Commissioner so as to conform
to that direction;
(c) make such order as to costs as the High Court may deem fit.
(Added 12 of 1979 s. 3)

68. Hearing and disposal of appeals
to the Board of Review
(1) Except where a notification of consent in respect of the transfer of any
appeal under section 67 is received by the Board within the time allowed in that
behalf by that section, every appeal under section 66 shall be heard by the
Board in accordance with this section and the clerk to the Board shall, as soon
as may be after the receipt of the notice of appeal, fix a time and place for
the hearing of the appeal, and shall give 14 clear days' notice thereof to the
appellant and the Commissioner:





Provided that the time so fixed for the hearing of the appeal shall not be
earlier than-
(a)in the case of an appeal in respect of which neither party to the
appeal gives notice under section 67(1), the expiration of the time
allowed by that section for giving such notice; or
(b)in the case of an appeal in respect of which notice under section
67(1) is given-
(i) by the appellant; or
(ii) by the Commissioner but not by the appellant,
the expiration of a period of 21 days after the date on which such
notice is given. (Replaced 12 of 1979 s. 4)
(2) Subject to subsection (2B), an appellant shall attend at the meeting of
the Board at which the appeal is heard in person or by an authorized
representative. (Amended40of]972s.8)
(M) At any time before the hearing of an appeal, the appellant may
withdraw the appeal by notice in writing addressed to the clerk to the Board.
(Added40 of 1972 s. 8)
(2B) If, on the date fixed for the hearing of an appeal, the appellant fails
to attend at the meeting of the Board either in person or by his authorized
representative the Board may-
(a)if satisfied that the appellant's failure to attend was due to
sickness or other reasonable cause, postpone or adjourn the
hearing for such period as it thinks fit;
(b) proceed to hear the appeal under subsection (213); or
(c) dismiss the appeal. (Added40 of 1972s. 8)
(2Q If an appeal has been dismissed by the Board under subsec-
tion (2B)(c) the appellant may, within 30 days after the making of the order for
dismissal by notice in writing addressed to the clerk to the Board, apply to the
Board to review its order and the Board may, if satisfied that the appellant's
failure to attend at the meeting of the Board for the hearing of the appeal was
due to sickness or any other reasonable cause, set aside the order for dismissal
and proceed to hear the appeal. (Added40 of 1972s. 8)
(213) The Board may, if satisfied that an appellant will be or is outside Hong
Kong on the date fixed for the hearing of the appeal and is unlikely to be in Hong
Kong within such period thereafter as the Board considers reasonable on the
application of the appellant made by notice in writing addressed to the clerk to the
Board and received by him at least 7 days prior to the date fixed for the hearing of
the appeal, proceed to hear the appeal in the absence of the appellant or his
authorized representative. (Added40 of 1972s. 8. Amended 7 of1986s. 12)
(215) The Board may, if it hears an appeal in the absence of an appellant
or his authorized representative under subsection (213), consider such written
submissions as the appellant may submit to the Board. (Added40 of 1972s. 8.
Amended 7 of 1975 s. 42)





(3) The assessor who made the assessment appealed against or some other
person authorized by the Commissioner shall attend such meeting of the Board
in support of the assessment.
(4) The onus of proving that the assessment appealed against is excessive
or incorrect shall be on the appellant. (Replaced 35 of 1965 s. 34)
(5) All appeals shall be heard in camera, but any appeal may be reported
in such publications as may be approved by the Attorney General in such a
manner that the identity of the appellant is not disclosed. (Replaced 2 of 1971
s.43)
(6) The Board shall have power to summon to attend at the hearing any
person whom it may consider able to give evidence respecting the appeal and
may examine him as a witness either on oath or otherwise. Any person so
attending may be allowed by the Board any reasonable expenses necessarily
incurred by him in so attending.
(7) At the hearing of the appeal the Board may, subject to the provisions
of section 66(3), admit or reject any evidence adduced, whether oral or
documentary, and the provisions of the Evidence Ordinance (Cap. 8), relating
to the admissibility of evidence shall not apply.
(8) (a)After hearing the appeal, the Board shall confirm, reduce,
increase or annul the assessment appealed against or may remit
the case to the Commissioner with the opinion of the Board
thereon.
(b)Where a case is so remitted by the Board, the Commissioner shall
revise the assessment as the opinion of the Board may require
and in accordance with such directions (if any) as the Board,
at the request at any time of the Commissioner, may give
concerning the revision required in order to give effect to such
opinion. (Replaced 35 of 1965 s. 34)
(9) Where under subsection (8), the Board does not reduce or annul such
assessment, the Board may order the appellant to pay as costs of the Board
a sum not exceeding $1,000, which shall be added to the tax charged and
recovered therewith. (Amended 11 of 1985 s. 5)
(10) The Board shall for the purpose of this section have the powers
granted under section 4(1)(d), (e), (f) and (g) of the Commissions of Inquiry
Ordinance (Cap. 86), subject to the provisions of section 80 of this Ordinance.
(Added35of]965s.34. Amended26of 1969s. 35)

69. Appeals to the High Court

(1) The decision of the Board shall be final:
Provided that either the appellant or the Commissioner may make an
application requiring the Board to state a case on a question of law for the
opinion of the High Court. Such application shall not be entertained unless it is





made in writing and delivered to the clerk to the Board, together with a fee of
$450, within 1 month of the date of the Board's decision. If the decision of the
Board shall be notified to the Commissioner or to the appellant in writing, the
date of the decision, for the purposes of determining the period within which
either of such persons may require a case to be stated, shall be the date of the
communication by which the decision is notified to him. (Amended 49 of 1956
s. 50; 11 of 1985 s. 6; 4 of 1989 s. 4)
(2) The stated case shall set forth the facts and the decision of the Board,
and the party requiring it shall transmit the case, when stated and signed, to the
High Court within 14 days after receiving the same.
(3) At or before the time when he transmits the stated case to the High
Court, the party requiring it shall send to the other party notice in writing of the
fact that the case has been stated on his application and shall supply him with a
copy of the stated case.
(4) Any judge of the High Court may cause a stated case to be sent back
for amendment and thereupon the case shall be amended accordingly.
(5) Any judge of the High Court shall hear and determine any question of
law arising on the stated case and may in accordance with the decision of the
court upon such question confirm, reduce, increase or annul the assessment
determined by the Board, or may remit the case to the Board with the opinion
of the court thereon. Where a case is so remitted by the court, the Board shall
revise the assessment as the opinion of the court may require.
(6) In any proceedings before the High Court under this section, the court
may make such order in regard to costs in the High Court and in regard to the
sum paid under subsection (1) as to the court may seem fit. ,
(7) Appeals from decisions of the High Court under this section shall be
governed by the provisions of the Supreme Court Ordinance (Cap. 4), the Rules
of the Supreme Court (Cap. 4 sub. leg.), and the Orders and Rules governing
appeals to the Privy Council. (Amended 92 of 1975 s. 58)
(Amended 92 of 1975 s. 59)

against decision of Board of Review

(1) Notwithstanding section 69, the appellant or the Commissioner may,
with the leave of the Court of Appeal granted on the application of the
appellant or the Commissioner, as the case may be, appeal directly to the Court
of Appeal against the decision of the Board.
(2) Leave to appeal under this section may be granted on the ground that
in the opinion of the Court of Appeal it is desirable that, by reason of the
amount of tax in dispute or of the general or public importance of the matter or
its extraordinary difficulty or for any other reason, the appeal be heard and
determined by the Court of Appeal instead of the High Court.





(3) Section 69 shall apply in relation to appeals under this section as it
applies in relation to appeals under that section except that for references in
that section to the High Court or a judge of the High Court there shall be
substituted references to the Court of Appeal.
(Added 12 of 1979 s. 5)

70. Assessments or amended assessments to he final

Where no valid objection or appeal has been lodged within the time limited
by this Part against an assessment as regards the amount of the assessable
income or profits or net assessable value assessed thereby, or where an appeal
against an assessment has been withdrawn under section 68(2A) or dismissed
under subsection (2B) of that section, or where the amount of the assessable
income or profits or net assessable value has been agreed to under section 64(3),
or where the amount of such assessable income or profits or net assessable value
has been determined on objection or appeal, the assessment as made or agreed
to or determined on objection or appeal, as the case may be, shall be final and
conclusive for all purposes of this Ordinance as regards the amount of such
assessable income or profits or net assessable value: (Amended 49 of 1956
s. 51; 35 of 1965 s. 35; 40 of 1972 s. 9; 7 of 1979 s. 4)
Provided that nothing in this Part shall prevent an assessor from making
an assessment or additional assessment for any year of assessment which does
not involve re-opening any matter which has been determined on objection or
appeal for the year. (Amended 35 of 1965 s. 35)

70A. Powers of assessor to correct errors

(1) Notwithstanding the provisions of section 70, if, upon application
made within 6 years after the end of a year of assessment or within 6 months
after the date on which the relative notice of assessment was served, whichever
is the later, it is established to the satisfaction of an assessor that the tax
charged for that year of assessment is excessive by reason of an error or
omission in any return or statement submitted in respect thereof, or by reason
of any arithmetical error or omission in the calculation of the amount of the
assessable income or profits assessed or in the amount of the tax charged, the
assessor shall correct such assessment:
Provided that under this section no correction shall be made to any
assessment in respect of an error or omission in any return or statement
submitted in respect thereof as to the basis on which the liability to tax ought to
have been computed where the return or statement was in fact made on the
basis of or in accordance with the practice generally prevailing at the time when
the return or statement was made.





(2) Where an assessor refuses to correct an assessment in accordance with
an application under this section he shall give notice thereof in writing to the
person who made such application and such person shall thereupon have the
same rights of objection and appeal under this Part as if such notice of refusal
were a notice of assessment. (Added 35 of 1965 s. 36)
(Replaced 28 of 1964 s. 11)

70B. Husband and wife
Where, following an election under section 58A for separate assessment by
a husband and wife, either spouse makes an objection, appeal or application
under this Part in respect of any assessment made in consequence of the
election-
(a)the other spouse shall be deemed to be joined in the objection,
appeal or application;
(b)nothing in section 70 shall prevent a re-assessment being made in
respect of either spouse; and
(c) amended assessments may be issued to both spouses.
(Added 71 of 1983 s. 34)

PART XII

PAYMENT AND REcovERY oF TAx

71. Provisions regarding payment of tax
(1) Tax charged under the provisions of this Ordinance shall be paid in
the manner directed in the notice of assessment on or before a date specified in
such notice. Any tax not so paid shall be deemed to be in default, and the
person by whom such tax is payable, or where any tax is payable by more than
one person or by a partnership then each of such persons or each partner in
the partnership, shall be deemed to be a defaulter for the purposes of this
Ordinance. (Replaced 49 of 1956 s. 53)
(2) Tax shall be paid notwithstanding any notice of objection or appeal,
unless the Commissioner orders that payment of tax or any part thereof be held
over pending the result of such objection or appeal: (Amended 7 of 1985 s. 2)
Provided that where the Commissioner so orders he may do so
conditionally upon the person who or on whose behalf the objection or appeal
is made providing security for the payment of the amount of tax or any part
thereof the payment of which is held over either-
(a)by purchasing a certificate issued under the Tax Reserve
Certificates Ordinance (Cap. 289); or
(b) by furnishing a banker's undertaking,
as the Commissioner may require. (Added 7 of 1985 s. 2)





(3) Where the Commissioner is of opinion either that the tax or any part
thereof held over under subsection (2) is likely to become irrecoverable, or that
the person objecting or appealing is unreasonably delaying the prosecution of
his objection or appeal, he may cancel any order made under that subsection
and make such fresh order as the case may appear to him to require.
(Amended 49 of 1956 s. 53; 35 of 1965 s. 3 7)
(4) Where, upon the final determination of an objection or appeal under
Part Xl, or upon any order made by the Commissioner, any tax which has been
held over under subsection (2) becomes payable or the tax charged is increased,
the Commissioner shall give to the person objecting or appealing a notice in
writing fixing a date on or before which any tax or balance of tax shall be paid.
Any tax not so paid shall be deemed to be in default. (Amended 30 of 1950
Schedule; 49 of 1956 s. 53; 35 of 1965 s. 37)
(5) Where any tax is in default, the Commissioner may in his discretion
order that a sum or sums not exceeding 5% in all of the amount in default shall
be added to the tax and recovered therewith.
(5A) Where on the expiry of a period of 6 months from the date when any
tax is deemed to be in default, whether such date was before or after 1 August
1984, there remains unpaid any amount of the aggregate of-
(a) the tax deemed to be in default; and
(b) any sum added thereto under subsection (5),
the Commissioner may order that a sum or sums not exceeding 10% in all of
the unpaid amount shall be added to the unpaid amount and recovered
therewith. (Replaced 52 of 1984 s. 2)
(5B) Any amount charged by the Commissioner prior to 1 August 1984 in
the purported exercise of his powers under subsection (5A) by way of surcharge
upon the unpaid amount of any sum added to tax under subsection (5) shall,
notwithstanding that the tax was not in default at the time of making such charge,
be deemed to have been validly charged and to be recoverable as if the tax had
been in default at the time of making such charge. (Added 52 of 1984 s. 2)
(6) Notwithstanding anything contained in the previous subsections
of this section the Commissioner may agree to accept payment of tax by
instalments. (Amended 49 of 1956 s. 53)
(7) Where the Commissioner exercises his powers under the proviso
to subsection (2) and a person is required to purchase a certificate under
paragraph (a) of that proviso-
(a)a certificate in an amount equal to the tax or any part thereof the
payment of which is held over shall be purchased within a period
of 14 days from the date of the order of the Commissioner, or on
or before the date for the payment of tax specified in the notice of
the assessment, whichever is the later, failing which the provisions
of subsection (2) shall apply as they would if there had been no
order;





(b)the Commissioner shall, when he issues a certificate so purchased,
note on it particulars sufficient to identify the objection or appeal
to which it relates;
(e)upon the withdrawal or final determination of the objection or
appeal a certificate or part of a certificate so purchased shall be
accepted by the Commissioner in payment of so much of the tax
held over as becomes or is found to become payable, and no
interest shall be payable upon any certificate or part of a
certificate so accepted;
(d)where, upon the final determination of the objection or appeal,
and after all tax held over which becomes, or is found to be,
payable has been paid in the manner specified in paragraph (c),
any certificate or part of a certificate so purchased has not been
accepted as payment by the Commissioner under paragraph (c),
the holder thereof may surrender that certificate or part to the
Commissioner and-
(i) if 36 months or less since the date of purchase of the
certificate has elapsed, at his option require the Com-
missioner to-
(A)issue a new certificate in the place of the old certificate
or part of the old certificate bearing the same date of
issue and rate of interest as that old certificate; or
(B)repay the principal value represented by the certificate
or part together with the interest thereon at the rate
prescribed by the rules from the date of issue of the
certificate to the date of the final determination of the
objection or appeal; or
(ii) if more than 36 months since the date of purchase of the
certificate has elapsed, the Commissioner shall repay to the
holder the principal value represented by the certificate or
part together with interest thereon, at the rate prescribed by
the rules, from the date of issue of the certificate to the date
of the final determination of the objection or appeal; and
(e)no certificate so purchased shall be valid for any purpose except
as specified in the preceding paragraphs. (Added 7 of 1985 s. 2)
(8) The provisions of subsection (7) shall apply notwithstanding anything
to the contrary in the rules relating to such certificates made under the Tax
Reserve Certificates Ordinance (Cap. 289) and any reference to the rules
relating to such certificates in that subsection shall refer to the rules so made.
(Added 7 of 1985 s. 2)
(9) Where the Commissioner exercises his powers under the proviso to
subsection (2) and a person is required to furnish a banker's undertaking under
paragraph (b) of that proviso, the undertaking shall-





(a) be in a form acceptable to the Commissioner;
(b) be furnished to the Commissioner within a period of 14 days
from the date of the order of the Commissioner, or on or before
the date for the payment of the tax specified in the notice of
assessment, whichever is the later;
(c) be given by a bank (as defined in the Banking Ordinance (Cap.
155));
(d) not be revocable without the consent of the Commissioner;
(e) be expressed to be an undertaking to pay-
(i) an amount equal to the tax or any part thereof the payment
of which is held over; and
(ii) interest on that amount, from the date for the payment of
the tax specified in the notice of assessment to the date of
withdrawal or final determination of the objection or appeal,
at the rate specified in subsection (11); and
(f) provide for payment to the Commissioner upon written
notification to the bank by the Commissioner that the objection
or appeal has been withdrawn or finally determined and that the
amount, and interest, stated by him is now due,
and if such person fails to supply such an undertaking in such manner the
provisions of subsection (2) shall apply as they would if there had been no
order. (Added 7 of 1985 s. 2)
(10) Where the Commissioner makes an order under subsection (2) but
does not exercise his powers under the proviso thereto, interest shall be payable
on so much of the amount of the tax or any part thereof the payment of which
is held over as becomes payable or is found to become payable upon the
withdrawal or final determination of the objection or appeal, from the date for
the payment of the tax specified in the notice of assessment or the date of the
order, whichever is the later, to the date of withdrawal or final determination of
the objection or appeal, at the rate specified in subsection (11). (Added 7 of
1985s.2)
(11) The rate of interest specified for the purposes of subsections (9)(e)(ii)
and (10) shall be the rate fixed by the Chief Justice by notice in the Gazette
under section 50 of the District Court Ordinance(Cap. 336). (Added7of]985
s.2)

72. Tax to include fines, etc.

In the succeeding sections of this Part, 'tax' includes any sum or sums
added under section 71(5) or (5A) by reason of default, together with any
fines, penalties, fees, or costs incurred, and any interest payable under section
71(9)(e)(ii) or (10).
(Amended 23 of 19 74 s. 5; 7 of 1985 s. 3)





73-74. (Repealed 49 of 1956 s. 54)

75. Tax recoverable as a civil debt
through the District Court

(1) Tax due and payable under this Ordinance shall be recoverable as a
civil debt due to the Crown.
(2) Whenever any person makes default in payment of tax the
Commissioner may recover the same by action in the District Court
notwithstanding that the amount is in excess of the sum mentioned in section 33
of the District Court Ordinance(Cap. 336). (Amended 35 of 1966 Schedule; 68
of 1973 s. 5; 79 of 1981 s. 3)
(3) In proceedings under this section for the recovery of tax the
production of a certificate signed by the Commissioner stating the name and
last known postal address of the defaulter and particulars of the tax due by him
shall be sufficient evidence of the amount so due and sufficient authority for a
District Court to give judgment for the said amount.
(4) In proceedings under this section for the recovery of tax the court
shall not entertain any plea that the tax is excessive, incorrect, subject to
objection or under appeal, but nothing in this subsection shall be construed so
as to derogate from the powers conferred by the proviso to section 51(4B)(a) to
give judgment for a less sum in the case of proceedings for the penalty specified
therein. (Amended 35 of 1965 s. 38)
(5) In any proceedings in the District Court under this section, the
Commissioner may appear in person or may be represented either by a legal
officer within the meaning of the Legal Officers Ordinance (Cap. 87) or by any
other person authorized by him in writing.
(Replaced 49 of 1956 s. 55)

75A. Recovery of tax from wife

Where section 12B(2) or 42A has applied to a husband and his wife for a
year of assessment and no election separate assessment has been made
under section 58A, such part of the total amount of tax charged on the husband
as bears the same proportion to such total amount as the amount of the income
of the wife bears to the income of the husband (including income of his wife
aggregated with his) may, if due and not paid, be collected from the wife, or if
she is dead from her executor, notwithstanding that no assessment has been
made upon her, and the provisions of this Ordinance as to the collection and
recovery of tax shall apply accordingly.
(Added 2 of 1971 s.44. Amended 71 of 1983 s. 35)





76. Recovery of tax from a debtor of the taxpayer
(1) Where tax payable by a person is in default, or a person charged to
tax has quitted Hong Kong or in the opinion of the Commissioner is likely to
quit Hong Kong without paying all the tax charged to him, and it appears to
the Commissioner to be probable that any other person (hereinafter in this
subsection referred to as 'the third party')- (Amended 7 of 1986 s. 12)
(a)owes or is about to pay money to such person (hereinafter in this
subsection referred to as 'the taxpayer'); or
(b) holds money for or on account of the taxpayer; or
(e)holds money on account of some other person for payment to the
taxpayer; or
(d)has authority from some other person to pay money to the
taxpayer,
the Commissioner may give the third party notice in writing (a copy of which
shall be sent by post to the taxpayer) requiring him to pay such moneys not
exceeding the amount of tax in default or charged, as the case may be, to the
officer named in the notice. The notice shall apply to all such moneys which are
in the third party's hands or due from him or about to be paid by him at the
date of receipt of such notice or which come into his hands or become due from
him or about to be paid by him at any time within a period of 30 days
thereafter. (Replaced 26 of 1969 s. 36)
(2) Any person who has made any payment in pursuance of this section
shall be deemed to have acted under the authority of the person by whom the
tax was payable or on whom it was charged and of all other persons concemed,
and is hereby indemnified in respect of such payment against all proceedings
civil or criminal notwithstanding the provisions of any written law, contract or
agreement.
(3) Any person to whom notice has been given under subsection (1) who
is unable to comply therewith shall within 14 days of the expiration of the
period of 30 days from the date of receipt of such notice give notice in writing
to the Commissioner acquainting him with the facts.
(4) Any person to whom a notice has been given under subsection (1) who
could have complied therewith but failed to do so within 14 days after the
expiration of the period referred to in subsection (1), shall be personally liable
for the whole of the tax which he was required to pay, and such tax may be
recovered from him by all means provided in this Ordinance for the recovery of
tax from a person who has made default in payment.
(Replaced 49 of 1956 s. 56)

77. Recovery of tax from persons leaving Hong Kong
(1) Where the Commissioner is of opinion that any person is about to or
likely to leave Hong Kong without paying all tax assessed upon him, he may





issue a certificate containing particulars of such tax and the name and last
known place of abode, business or employment of such person to a District
Judge, who shall on receipt thereof issue a direction to the Commissioner of
Police to take such measures including the use of such force as may be necessary
to prevent such person from leaving Hong Kong without paying the tax or
furnishing security to the satisfaction of the Commissioner for payment thereof.
(Amended 49 of 1956 s. 57,.35 of 1969 Schedule)
(2) The District Judge shall cause a notice of his direction to the
Commissioner of Police to be served on the person affected thereby either
personally or by being delivered at his last known place of abode, business or
employment. (Replaced 49 of 1965 s. 57. Amended 35 of 1969 Schedule)
(3) Production of a certificate signed by the Commissioner stating that
the tax has been paid, or that security has been furnished for payment of the
tax, to a police officer in charge of a police station shall be sufficient authority
for allowing such person to leave HongKong. (Amended 30 of 1950 Schedule;
2 of 1971 s. 45)
(4) Any person who knowing that a direction has been issued under this
section for the prevention of his departure from Hong Kong, leaves or attempts
to leave Hong Kong without paying all tax assessed upon him or furnishing
security to the satisfaction of the Commissioner for payment thereof shall be
guilty of an offence and may be arrested without warrant by any police officer
or member of the Immigration Service. Any person who commits an oflence
under this subsection shall be liable to a fine of $2,000 and to imprisonment for
6months. (Added49of]956s.57)
(5) No civil or criminal proceedings shall be instituted or maintained
against the Crown, the Commissioner, a District Judge, the Commissioner of
Police, or any police officer or member of the Immigration Service in respect of
anything lawfully done under the authority of this section. (Added 49 of 1956
s.57. Amended 35 of 1969 Schedule)
(Amended 7 of 1986 s. 12)

77A. Refusal of clearance to ships and
aircraft where tax is in default

(1) In addition to any other powers of collection and recovery provided
by this Ordinance, where a person has been charged to tax in respect of his
profits from the business of shipowner or charterer or aircraft owner or
charterer and such tax is in default and whether such person has been assessed
directly or in the name of some other person, the Commissioner, with the prior
approval of the Chief Secretary, may issue to the Director of Marine, the
Director of Civil Aviation or other authority by whom clearance may be
granted, a certificate containing the name or names of the said person and the
particulars of the tax in default.





(2) On receipt of such certificate the Director of Marine, the Director of
Civil Aviation, or other authority, shall be empowered and is hereby required
to refuse clearance from any port, aerodrome or airport or place within Hong
Kong to any ship or aircraft owned wholly or partly or chartered by such
person until the said tax has been paid or until security for payment has been
given to the satisfaction of the Commissioner. (Amended 7 of 1986 s. 12)
(3) No civil or criminal proceedings shall be instituted or maintained
against the Crown, the Chief Secretary, the Commissioner, the Director of
Marine, the Director of Civil Aviation or other authority, in respect of a refusal
of clearance under this section, nor shall the fact that a ship or aircraft is
detained under this section affect the liability of the owner, charterer or agent to
harbour, airport or other dues and charges for the period of detention.
(Added 49 of 1956 s. 58)

78. (Repealed 49 of 1956 s. 59)

PART XIII

REPAYMENT

79. Tax paid in excess to be refunded

(1) If it is proved to the satisfaction of the Commissioner by claim duly
made in writing within 6 years of the end of a year of assessment or within 6
months after the date on which the relevant notice of assessment was served,
whichever is the later, that any person has paid tax in excess of the amount with
which he was properly chargeable for the year, such person shall be entitled to
have refunded the amount so paid in excess: (Amended 49 of 1956 s. 60)
Provided that nothing in this section shall operate to extend or reduce any
time limit for objection, appeal or repayment specified in any other section or to
validate any objection or appeal which is otherwise invalid, or to authorize
the revision of any assessment or other matter which has become final and
conclusive. (Amended 35 of 1965 s. 39)
(2) An executor, trustee or receiver shall have the same right to make a
claim under the provisions of subsection (1) as the person whom he represents
would have had if such person had not been prevented from making such claim
by his death, incapacity, bankruptcy or liquidation and shall be entitled to have
refunded to him for the benefit of such person or such person's estate any tax
paid in excess within the meaning of subsection (1). (Replaced 49 of 1956
s.60)
(3) Where a non-resident person has been assessed in the name of another
person under section 20A or 20B and the tax so assessed has been paid by the
other person, the other person or the non-resident person, but not both, may





make a claim under subsection (1) for a refund of tax overpaid. In the event of a
refund being made to the other person his receipt shall be a valid discharge in
respect of the amount of overpaid tax so refunded. (Replaced 4 of 1989 s. 5)

PART XIV

PENALTIES AND OFFENCES

80. Penalties for failure to make returns,
mabng incorrect returns, etc.

(1) Any person who without reasonable excuse-
(a)fails to comply with the requirements of a notice given to him
under section 51(3), SI A(I), 52(1) or (2), or 64(2); or
(b)fails to attend in answer to a summons issued under section 64(2)
or 68(6), or having attended fails to answer any questions put to
him, being questions which, under section 64(2) or 68(6), as the
case may be, may be put to him; or
(c)fails to comply with the requirements of section 5(2)(c), 5(4),
5 1 (6), (7) or (8), 5 1 C(I), 5 1 D(I), 52(4), (5), (6) or (7), or 76(3),
shall be guilty of an offence: Penalty a fine of $5,000, and the court may order
the person convicted within a time specified in the order to do the act which he
has failed to do. (Replaced 35 of 1965 s. 40. Amended 26 of 1969 s. 37; 2 of
1971 s. 46; 43 of 1975 s. 6,.8 of 1983 s. 19; L.N. 411 of 1984; 17 of 1989 s. 18)
(IA) (Repealed 43 of 1975 s.6)
(2) Any person who without reasonable excuse-
(a)makes an incorrect return by omitting or understating anything
in respect of which he is required by this Ordinance to make a
return, either on his behalf or on behalf of another person or a
partnership;
(b)makes an incorrect statement in connection with a claim for any
deduction or allowance under this Ordinance;
(c)gives any incorrect information in relation to any matter or thing
affecting his own liability to tax or the liability of any other
person or of a partnership,-
(d)fails to comply wit~,tlNrfquirements of a notice given to him
under section 5 1 (1)~ or
(e) fails to comply with section 51(2),
shall be guilty of an offence: Penalty a fine of $5,000 and a further fine of treble
the amount of tax which has been undercharged in consequence of such
incorrect return, statement or information, or would have been so
undercharged if the return, statement or information had been accepted as
correct, or which has been undercharged in consequence of the failure to






comply with a notice under section 51(1) or a failure to comply with section
51(2), or which would have been undercharged if such failure had not been
detected. (Replaced 43 of 1975 s. 6. Amended L.N. 411 of 1984)
(2A) In the case of an offence under subsection (2)(d), the court may
order the person convicted to comply with the requirements of the notice given
to him under section 51(1) within such time as may be specified in the order.
(Added 43 of 1975 s. 6)
(2B) Any person who does not comply with an order of the court under
subsection (1) or (M) or under section 51(4B)(b) shall be guilty of an offence:
Penalty a fine of $5,000. (Added43of]975s.6)
(3) No person shall be liable to any penalty under this section unless the
complaint concerning such offence was made in the year of assessment in
respect of or during which the offence was committed or within 6 years after the
expiration thereof. (Amended 49 of 1956 s. 61)
(4) Any person who aids, abets or incites another person to commit an
offence under this section shall be deemed to have committed the same ofrence
and to be liable to the same penalty. (Added49of]956s.61)
(5) The Commissioner may compound any offence under this section
and may before judgment stay or compound any proceedings thereunder.
(Amended 49 of 1956 s. 61)

80A. (Repealed 17 of 1989 s. 19)

81. Breach of secrecy and other matters to he oflences

Any person who-
(a)acts under this Ordinance without taking an oath of secrecy as
required by section 4(2); or
(b)acts contrary to the provisions of section 4(1) or to an oath taken
under section 4(2); or
(c)aids, abets, or incites any other person to act contrary to the
provisions of section 4, (Amended 49 of 1956 s. 62)
shall be guilty of an offence: Penalty a fine of 550,000. (Amended 43 of 1975
s. 7)

82. Penal provisions relating to fraud, etc.

(1) Any person who wilfully with intent to evade or to assist any other
person to evade tax-
(a)omits from a return made under this Ordinance any sum which
should be included; or (Amended 30 of 1950 Schedule)
(b)makes any false statement or entry in any return made under this
Ordinance; or





(c)makes any false statement in connection with a claim for any
deduction or allowance under this Ordinance; or
(d)signs any statement or return furnished under this Ordinance
without reasonable grounds for believing the same to be true; or
(e) gives any false answer whether verbally or in writing to any
question or request for information asked or made in accordance
with the provisions of this Ordinance; or
prepares or maintains or authorizes the preparation or
maintenance of any false books of account or other records or
falsifies or authorizes the falsification of any books of account or
records; or
(g)makes use of any fraud, art, or contrivance, whatsoever or
authorizes the use of any such fraud, art, or contrivance,
shall be guilty of a misdemeanor: Penalty on summary conviction a fine of
$5,000 and a further fine of treble the amount of tax which has been
undercharged in consequence of the offence or which would have been
undercharged if the offence has not been detected, and to imprisonment for 6
months, and on indictment a fine of $20,000 and a further fine of treble the
amount of tax so undercharged or which would have been so undercharged
and to imprisonment for 3 years. (Amended 49 of 1956 s. 63; 40 of 1972 s. 12;
L.N. 411 of 1984)
(2) The Commissioner may compound any offence under this section and
may before judgment stay or compound any proceedings thereunder. '

82A. Additional tax in certain cases

(1) Any person who without reasonable excuse-
(a)makes an incorrect return by omitting or understating anything
in respect of which he is required by this Ordinance to make a
return, either on his behalf or on behalf of another person or a
partnership; or
(b)makes an incorrect statement in connection with a claim for any
deduction or allowance under this Ordinance; or
(c) gives any incorrect information in relation to any matter or thing
affecting his own liability to tax or the liability of any other
person or of a partnership; or

(d) fails to comply with the requirements of a notice given to him
under section 51(1); or
(e) fails to comply with section 51(2),
shall, if no prosecution under section 80(2) or 82(1) has been instituted in
respect of the same facts, be liable to be assessed under this section to
additional tax of an amount not exceeding treble the amount of tax which-





(i) has been undercharged in consequence of such incorrect return,
statement or information, or would have been so undercharged
if the return, statement or information had been accepted as
correct; or
(ii) has been undercharged in consequence of the failure to comply
with a notice under section 51(1) or failure to comply with
section 51(2), or which would have been undercharged if such
failure had not been detected. (Amended 43 of 1975s.8)
(2) Additional tax shall be payable in addition to any amount of tax
payable under an assessment, or an additional assessment under section 60.
(3) An assessment of additional tax may be made only by the
Commissioner personally or the deputy commissioner personally.
(4) Before making an assessment of additional tax the Commissioner or
the deputy commissioner, as the case may be, shall-
(a)cause notice to be given to the person he proposes so to assess
which shall-
(i) inform such person of the alleged incorrect return, incorrect
statement or incorrect information or alleged failure to
comply with the requirements of the notice given to him
under section 51(1) for the alleged failure to comply with
section 51(2) in respect of which the Commissioner or
deputy commissioner intends to assess additional tax under
subsection(l); (Replaced 43 of 1975 s.8)
(ii) include a statement that such person has the right to submit
written representations to him with regard to the proposed
assessment on him of additional tax;
(iii)specify the date, which shall not be earlier than 21 days from
the date of service of the notice, by which representations
which such person may wish to make under subparagraph
(ii) must be received;
(b)consider and take into account any representations which he may
receive under paragraph (a) from or on behalf of a person
proposed to he assessed for additional tax.
(4A) Notwithstanding subsection (4), if the Commissioner or deputy
commissioner is of the opinion that the person he proposes to assess to
additional tax under subsection (1) is about to leave Hong Kong, he need not
serve a notice under subsection (4)(a), but may assess that person to additional
tax under subsection (1). (Added43of]975s.8. Amended 7of 1986s. 12)
(5) Notice of intention to assess additional tax and notice of an
assessment to additional tax shall be given in the same manner as is provided in
section 58(2) in respect of a notice of assessment under section 62.
(6) Where a person who is liable to be assessed to additional tax has died,
an assessment to additional tax may be made on his executor, and the





additional tax shall be recovered as a debt due from and payable out of the
deceased person's estate.
(7) A person who has been assessed to additional tax under subsection (1)
shall not be liable to be charged on the same facts with an offence under section
80(2) or 82(1).
(Added 26 of 1969 s. 38)

tax to Board of Review
(1) Any person who has been assessed to additional tax under section
82A may, within 1 month after notice of assessment is given to him, give notice
of appeal to the Board; but no such notice shall be entertained unless it is given
in writing to the clerk to the Board and is accompanied by-
(a) a copy of the notice of assessment;
(b) a statement of the grounds of appeal from the assessment;
(c)a copy of the notice of intention to assess additional tax given
under section 82A(4), if any such notice was given; and
(d)a copy of any written representations made under section 82A(4).
(Replaced 43 of 1975 s. 9)
(2) On an appeal against assessment to additional tax, it shall be open to
the appellant to argue that-
(a) he is not liable to additional tax;
(b)the amount of additional tax assessed on him exceeds the amount
for which he is liable under section 82A;
(c)the amount of additional tax, although not in excess of that for
which he is liable under section 82A, is excessive having regard to
the circumstances.
(3) Sections 66(2) and (3), 68, 69 and 70 shall, so far as they are
applicable, have effect with respect to appeals against additional tax as if such
appeals were against assessments to tax other than additional tax.
(Added 26 of 1969 s. 38)

83. Tax payable notwithstanding proceedings

The institution of proceedings for, or the imposition of, a penalty, fine, or
term of imprisonment under this Part shall not relieve any person from liability
to assessment or payment of any tax for which he is or may be liable.
(Amended 49 of 1956 s. 64)

84. Prosecutions, sanction of Commissioner
(1) No prosecution in respect of an offence under section 80 or 82 may be
commenced except at the instance of or with the sanction of the Commissioner.





(2) Nothing in this section shall derogate from the powers of the Attorney
General in respect of the prosecution of criminal ofFences. (Added 26 of 1969
s.39)

PART XV

GENERAL

85. Power to make rules

(1) The Board of Inland Revenue may from time to time make rules
generally for carrying out the provisions of this Ordinance and for the
ascertainment and determination of any class of income or profits. (Amended
30 of 1950 Schedule)
(2) Without prejudice to the generality of the foregoing power such rules
may-
(a)prescribe the procedure to be followed on application for refunds
and relief;
(b)provide for any matter which by this Ordinance is to be or may
be prescribed;
(e)for the purpose of any of the provisions of this Ordinance,
prescribe what is or is deemed to be included in, or excluded
from, the expression 'machinery or plant' and the expression
'implement, utensil or article'. (Added35of]965s.41)
(3) Such rules may prescribe fines recoverable on summary conviction for
any contravention thereof or failure to comply therewith not exceeding in each
case a sum of $200.
(4) All such rules made by the Board of Inland Revenue shall be
submitted to the Governor, and shall be subject to the approval of the
Legislative Council.

86. Board of Inland Revenue to specify forms

(1) The Board of Inland Revenue may specify any forms which may be
necessary for carrying this Ordinance into effect. (Amended 39 of 1969 s. 10)
(2) Where a specimen of any form bears an endorsement, purporting to
be signed by the secretary to the Board of Inland Revenue, to the effect that the
form is specified by the Board of Inland Revenue, it shall be presumed, until the
contrary is proved, that the form is a form specified by the Board of Inland
Revenue under subsection (1).(Added8of 1983s. 20)





87. General power of Governor in Council to exempt

The Governor in Council may by order exempt any person, office or
institution from payment of the whole or any portion of any tax chargeable
under this Ordinance. (L.N. 164 of 1989)

87A. Approval of retirement schemes

Upon application in such manner as may be prescribed the Commissioner
may, for the purposes of this Ordinance, approve, either as a whole or in part,
any retirement scheme which, in his opinion, complies substantially with such
requirements as may be prescribed, and may withdraw any approval so given.
(Added49of]956s.65. Amended7of1986s.12)

88. Exemption of charitable bodies

Notwithstanding anything to the contrary in this Ordinance contained
there shall be exempt and there shall be deemed always to have been exempt
from tax any charitable institution or trust of a public character:
Provided that where a trade or business is carried on by any such
institution or trust the profits derived from such trade or business shall be
exempt and shall be deemed to have been exempt from tax only if such profits
are applied solely for charitable purposes and are not expended substantially
outside Hong Kong and either- (Amended 7 of 1986 s. 12)
(a)the trade or business is exercised in the course of the actual
carrying out of the expressed objects of such institution or trust;
or
(b)the work in connection with the trade or business is mainly
carried on by persons for whose benefit such institution or trust is
established.
(Added3of]949s.18. Amended 30 of 1950 Schedule; 49 of 1956 s. 66;
26 of 1969 s. 40; 65 of 1970 s. 10)

SCHEDULE1 [ss. 2 & 51

STANDARD RATE

For the years of assessment 1947148 to
1949/50 inclusive -10%.
(Amended 49 of 1956 s. 67)
For the years of assessment 1950/51 to
1965166 inclusive -121%.
(Amended 15 of 1966 s. 4)





For the years of assessment 1966/67 to
1983184 inclusive - 15%.
(Added 15 of 1966s. 4. Amended36of1984
s.7)
For the years of assessment 1984-85 to
1986-87 inclusive - 17%.
(Added36 of 1984s. 7. Amended28of1987
S.8)
For the year of assessment 1987188 - 161%.
(Added28of 1987s. 8. Amended28of1988
s.7)
For the year of assessment 1988189 - 151%.
(Added28of 1988s. 7. Amended17of1989
s.20)
For the year of assessment 1989/90 and until
superseded - 15%.
(Added 17 of 1989 s. 20)

SCHEDULE 2 [ss. 13 & 43(1)l

RATES

For the years of assessment 1947/48 to 1949/50 inclusive
(Amended 49 of 1956 s. 68)

SECOND COLUMN THIRD COLUMN

(a) Upon the first $5,000 standard rate

(b) Upon the next $5,000

(C) -do-
(d) -do- The full standard rate
(C) -do- Ii standard rate
(f) -do-
(g) - do -

(h) Upon the remainder Twice the standard rate
Note:-Where a person is liable to the appropriate tax for a part only of any year of
assessment the amounts in the second column against items (a) to (g) will be reduced
in the proportion which the number of days he is so liable bears to the number of days
in that year of assessment.





For the years of assessment 1950/51 to 1965/66 inclusive
SECOND COLUMN THIRD COLUMN

(a) Upon the first $5,000 1 standard rate
(b) Upon the next $5,000 2
3 11 11

(C) - do - 3
(d) - do - 4
(e) - do - The full standard rate
- do - 11 standard rate
(g) - do -
5

(h) - do -
(i) - do - 14
5

(j) Upon the remainder Twice the standard rate
(Added 30 of 1950 Schedule.Amended 37 of 1950 Schedule; 15 of 1966 s.5)

For the years of assessment 1966/67 to 1971/72 inclusive

SECOND COLUMN THIRD COLUMN

(a) Upon the first $5,000 2J%
(b) Upon the next $5,000 51%

(C) - do - %%
(d) - do - 11%
(e) -do- 14%
(f) -do- 17%
(g) -do- 20%
(h) -do- 23%
(i) - do - 26%

(j) Upon the remainder 30%
(Added 15 of 1966s. 5.Amended40of1972s.2)





For the years of assessment 1972/73

SECOND COLUMN T~ COLUMN

(a) Upon the first $5,000 21%
(b) Upon the next $5,000 5%

(C) -do- 71%
(d) -do- 10%
(e) -do- 121%
(f) -do- 15%
(9) -do- 171%
(h) -do- 20%
(i) -do- 221%
(i) -do- 25%
(k) -do- 271%

(1) Upon the remainder 30%
(Added26ofl972s.2.Amended33of 1973s. 5)

For the years of assessment 1973/74 to 1977/78 inclusive

SECOND COLUMN THmO COLUMN

(a) Upon the first $10,000 5%
(b) Upon the next $10,000 10%
(C) -do- 15%
(d) - do - 20%
(e) - do - 25%
(f) Upon the remainder 30%

(Added33of 1973s. 5. Amended29of]979s.3;L.N.137of]981)





For the years of assessment 1978/79 to 1984/85 inclusive

SECOND COLUMN T~ COLUMN

(a) Upon the first $10,000 5%
(b) Upon the next $10,000 10%
(C) -do- 15%
(d) - do - 20%
(e) Upon the remainder 25%
(Added29of 1979s. 3.Amended21 of 1985 s. 3)

For the years of assessment 1985/86 to 1986/87 inclusive

SECOND COLUMN T~ COLUMN

(a) Upon the first $10,000 5%
(b) Upon the next $10,000 10%
(C) -do- 15%
(d) Upon the next 520,000 20%
(e) Upon the remainder 25%
(Adikd21 of 1985 s. 3.Amended28of 1987s. 9)

For the year of assessment 1987/88
SECOND COLUMN T~ COLUMN

(a) Upon the first $10,000 5%
(b) Upon the next $10,000 10%
(c) Upon the next $20,000 15%
(d) Upon the next $20,000 20%
(e) Upon the remainder 25%
(Added28of 1987s. 9.Amended28of 1988s. 8)





For the year of assessment 1988/89 and, c-b-7~ 1 1 ~,q - 3 0 Q
SECOND COLUMN TnRD COLUMN

(a) Upon the first $10,000 3%
(b) Upon the next $10,000 6%

(C) -do- 9%
(d) - do - 12%
(e) - do - 15%
(f) -do- 18%
(g) - do - 21%

(h) Upon the remainder 25%

(Added 28 of 1988 s. 8)

SCHEDULE 3 [s. 16(2)(b) & (6)]

PUBLIC UTILITY COMPANIES

fhe Hong Kong Electric Company, Limited.
China Light and Power Company, Limited-
The Hong Kong and China Gas Company, Limited.
(Added2of]97]s.48.Amended ]7of 1989s. 21)

SCHEDUL [s. 42B1

P T1
SCHED

P
UL

ses
Percentage reduction specified for the p oses of s. 42B(1)(aa)-
0

nt 1 9/8
'80 to
0 t
nil
s
'> 7
- fr t

For the years of assessment 1
1986/87 inclusive - nil
(Ant
en 7/88 and
s t _ 10.
(Amended 28 of 1987 s. 10)
For the year of a ent 1987/88 and
asse
subsequent y , of assessment - 10%
,~a
(Added 28 of 1987s. 10)





P T 2
T 2
P ~
Percentage reduction specifi d f th r /sesofs.421B(I)(bb)--
r
'e or 'e p~
For the years of assessment 19-, &0 to
1986/87 inclusive - nil
(Added 48 of1980 s.4. Amended28of1987
S. 10)
For the year of a ment 1987188 and
subsequent years o assessment - 10%
(A dded 28 of 1987 s. 10)

1