Hong Kong's Secretary for Commerce and Economic Development, Frederick Ma, has rejected calls to introduce 'group loss relief' and 'loss carry-back' arrangements into the profits tax regime, arguing that such provisions could be open to abuse.
He told the Legislative Council that complicated legislative provisions would be needed to guard against such potential abuses, complicating Hong Kong's simple tax system. Substantial resources would also be required.
He revealed that the Government has studied the proposals for the introduction of the aforementioned arrangements, but considers that they would bring significant tax revenue loss, which would be particularly acute in economic downturns.
"Group loss relief" allows one or more companies' losses to offset profits of other companies of the same group, and "loss carry-back" allows losses to offset profits made in previous years so the company concerned can get a refund on tax paid.
A comprehensive report in our Intelligence Report series looking at offshore and onshore corporate structures and their tax implications is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report7.asp
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