Articles

Items filtered by date: March 2017

Items filtered by date: March 2017

Items filtered by date: March 2017
Monday, 27 March 2017 15:00

OLN Movie Night

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On 22nd March, Oldham, Li & Nie hosted its first event of the year to celebrate its 30th Anniversary. More than 150 guests enjoyed a magical evening of entertainment starting with a cocktail reception at Isola before heading to a private screening of the new Beauty and the Beast movie.

Published in Announcements Category

By Anna Chan

 

It is an inevitable trend under the international tax reform that countries will be working together to promote transparency in tax administration. Hong Kong, as a responsible international citizen and a leading financial centre, has recently put in place domestic legislation in relation to Automatic Exchange of Financial Account Information (“AEOI”).

1. What is AEOIs?

AEOI is a new system that involves the transmission of bank account holders’ financial information from Hong Kong to an overseas tax jurisdiction with which Hong Kong has entered into an AEOI agreement (or known as an “AEOI Partner”).

The transmission of the information would involve the following steps:-

AEOI no white

What sort of information will be furnished and exchanged?

  • Name, address, jurisdiction of resident, tax identification no., the date and place of birth (in case of individuals)
  • Account number
  • Account balance or value as at the end of the specified information period or other appropriate reporting period
  • Interest income, dividend income, other income generated from the financial assets, gross proceeds from the sale or redemption of financial assets

Whom will the IRD exchange information with?/ Who are our AEOI Partners?

  • From 2018 onwards: Japan, United Kingdom for information of the preceding year
  • From 2019 onwards: Korea
  • Timeframe to be determined (legislation in progress): Belgium, Canada, Guernsey, Italy, Mexico, Netherlands

Additional jurisdictions will be added to the list upon signing of the following agreements with Hong Kong:-

  • A comprehensive avoidance of comprehensive avoidance of double taxation agreement (“CDTA”) or tax information exchange agreement (“TIEA”); and
  • A competent authority agreement (“CAA”)

 

2. Which account holders will be reported?

  • Account holders (both individuals and entities) who are subject to taxation as a resident in other jurisdictions.
  • Hong Kong taxpayers who are not tax residents of any territory outside Hong Kong will not be reported.

How will the reporting financial institutions identify the accounts held by tax residents of other jurisdictions?

The Inland Revenue (Amendment)(No.3) Ordinance 2016 provides the reporting financial institutions with the legal basis to collect the required information from account holders:-

(1) For accounts opened on or after 1 January 2017

Reporting financial institutions should request a self-certification from the account holder.

(2) For pre-existing accounts

If a reporting financial institution has doubts about the tax residence of an account holder, it can seek a self-certification from the account holder to verify its tax residence.

 

Will the account holders be sanctioned?

As a self-certification is a formal declaration that the account holder makes in connection with his / her tax residence, if the account holder has doubts about his / her tax residence, professional advice should be sought.

An account holder who knowingly or recklessly provides a statement that is misleading, false or incorrect in a material particular in making a self-certification to a reporting financial institutions is liable on conviction to a fine at level 3 ($10,000).

 

For a deeper discussion or any enquiry, please contact one of our members of the Tax Advisory team.

 

OLN’s partner Anna Chan, and associate, Victor Ng were invited by the Hong Kong Corporate Counsel Association to present on the topic of “A Recap on Hong Kong Tax System and The Latest Updates” on 16 March 2017.
Over a 3-course lunch, more than 50 attendees were given a precise recap of the Hong Kong tax system and the latest tax developments on BEPS, AEOI and CTC, which are some of the hottest topics at the moment.

You may download the presentation slides below.

 

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The OLN Tax Advisory Team

From left to right: Karen Sung (Trainee Solicitor), Jonathan Lam (Associate), Joey Chan (Tax Advisor), Anna Chan (Partner), Victor Ng (Associate), Tony Tam (Associate) and Gon Yeung (Trainee Solicitor) at the Hong Kong Bankers Club on 16 March 2016.

Published in Announcements Category
Tuesday, 14 March 2017 18:30

PRC Enterprise Income Tax 2017

Article 1 of the PRC’s Enterprise Income Tax Law provides that the following two types of enterprises shall pay Enterprise Income Tax (“EIT”)...

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Enterprise Income Tax

Tuesday, 14 March 2017 18:28

PRC Individual Income Tax 2017

The individual income tax (“IIT”), under the PRC’s Individual Income Tax Law (“IITL”), is imposed on the taxable income earned by individuals who reside in the PRC or have derived PRC sourced income.

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Individual Income Tax

Tuesday, 14 March 2017 18:26

Hong Kong Stamp Duty 2017

Stamp duty is a tax levied on documents or instruments (as opposed to transactions) under the Stamp Duty Ordinance (“SDO”). Any instruments falling within the prescribed heads of charge is required to be stamped, irrespective of the place of execution of that document.

This factsheet focuses on the discussion on stamp duty in connection with sale of immovable property (under Head 1) and the sale and purchase of Hong Kong stock (under Head 2).

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Stamp Duty

Tuesday, 14 March 2017 18:22

Hong Kong Property Tax 2017

Under Section 5 of the Hong Kong Inland Revenue Ordinance (“IRO”), property tax shall be charged for each year of assessment on the owner of any land or buildings or both situated in Hong Kong on the net assessable value at the standard rate. In other words, income from immovable properties situated in Hong Kong will be subject to property tax...

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Property Tax

Tuesday, 14 March 2017 18:13

Hong Kong Profits Tax 2017

Hong Kong adopts a territorial principle on taxation.Only profits arising in or derived from within the territory of Hong Kong will be chargeable to Hong Kong profits tax. Under Section 14 of the Inland Revenue Ordinance (“IRO”), a person is subject to Hong Kong profits tax if all of the following three conditions exist...

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Profits Tax

Tuesday, 14 March 2017 13:52

Hong Kong Salaries Tax 2017

Pursuant to Section 8 of the Hong Kong Inland Revenue Ordinance (“IRO”), salaries tax shall be charged on every person in respect of his income...

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Salaries Tax

Budget2017 18 Post

 

Author: Anna Chan, Partner

With a forecast budget surplus of HK$92.8 billion for 2016-2017 attributed mainly by land sales and stamp duty, Financial Secretary Paul Chan Mo-po has followed his predecessor’s path to hand out “candies” totaling HK$35.1 billion. But are you getting any of them? Please check out the list below:-

  • Reduction on profits tax, salaries tax and tax under personal assessment by 75% for 2016-2017 subject to a cap of HK$20,000.
  • Widening of the marginal bands for salaries tax from the current HK$40,000 to HK$45,000.
  • Raising of the disabled dependent allowance from the current HK$66,000 to HK$75,000.
  • Raising of the dependent brother/sister allowance from the current HK$33,000 to HK$37,500.
  • Extension of the entitlement period for the tax reduction for home loan interest from 15 years of assessment to 20 years.
  • Raising of the deduction ceiling for self-education expenses from the current HK$80,000 to HK$100,000.
  • Waiving of government rates for four quarters of 2017-2018 subject to a cap of HK$1,000 per quarter.

Support for Small and Medium Enterprises (“SME”)

  • Continuation of the Dedicated Fund on Branding, Upgrading and Domestic Sales in furthering business development in the Mainland.
  • Continuation of the special concessionary measures under the SME Financing Guarantee Scheme to help enterprises tide over their liquidity needs.
  • Strengthening of the underwriting capacity of the Hong Kog Export Credit Insurance Corporation (“ECIC”) to provide Hong Kong exporters with insurance protection against non-payment risks by raising the cap on the contingent liability of ECIC under contracts of insurance from HK$40 billion to HK$55 billion.
  • Continuation of the Technology Voucher Programme to provide each eligible SME with funding of up to HK$200,000 to promote the effective use of technological services and solutions among SMEs for better operation efficiency.

With the aim to enhance Hong Kong’s overall competitiveness, new measures will also be introduced to nurture certain emerging industries:-

Aircraft Leasing Business

A dedicated tax regime has been proposed [Note: not the law yet] which would result in an effective tax rate of 1.65% (i.e., 20% x 8.25%) [as opposed to the 16.5% general tax rate] for qualifying transactions in order to attract aircraft financing and leasing business to Hong Kong. Details are as follows:-

  • Qualifying aircraft lessors and qualifying aircraft leasing managers for offshore aircraft leasing transactions in Hong Kong (with non-Hong Kong aircraft operators as lessees) can enjoy half payment of the prevailing HK corporate income tax rate of 16.5% (i.e. 8.25%); and
  • For qualifying aircraft lessors, only 20% of the profits (excluding tax depreciation) generated from the leasing of an aircraft to a non-Hong Kong aircraft operator will be regarded as HK source and subject to Hong Kong tax.

Fund Industry

To facilitate Hong Kong’s development into a full-fledged fund service centre, the Government proposes to extend the profits tax exemption for qualifying offshore funds and offshore private equity funds to onshore privately-offered open-ended fund companies.  

Other measures include:-

  • The First Registration Tax exemption for electric vehicles which was introduced to promote a wider use of electric vehicles to replace diesel and petrol vehicles will be revised and the First Registration Tax waiver for electric private cars will be capped at HK$97,500 from 1 April 2017.
  • The Government will issue a second batch of Silver Bond in 2017-2018 which targets at Hong Kong residents aged 65 or above who are looking for investment products with steady returns.
  • Waiving the licence fees for tourism-related industries including restaurants and hawkers and fees for restricted food permits for one year.

For a deeper discussion or any enquiry, please contact one of our members of the Tax Advisory team.

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