Advance Ruling Cases

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Rulings are published for general reference only. Caution should be exercised in relying upon the rulings. Reference can only be made to a ruling if the facts are identical to the proposed transactions. To that end it should be borne in mind that similar transactions often have different facts. If there are any doubts as to the similarity of the proposed transactions the taxpayer should request a ruling. Caution should also be exercised to ensure that the relevant provisions of the Ordinance or the relevant case law interpretation and practice of those provisions have not changed as the Inland Revenue Department is bound to apply the current taxation law. Similarly, a ruling may no longer be appropriate if an administrative practice outlined therein turns out to be used as a tax avoidance device.

In order to protect taxpayer confidentiality, the Department will edit the selected rulings prior to publication. Accordingly, all information that may enable identification of the taxpayer will be removed from the edited version.

The Department will not update the rulings published on the website to reflect any subsequent changes of the tax law.

Advance Ruling Index

Carrying on a trade, profession or business in Hong Kong

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
13	section 14	Whether the non-resident person carried on business in Hong Kong through an agent Source of profits – trading
16	section 14	Whether the non-resident person carried on business in Hong Kong through an agent Source of profits – service income
26	section 14	Whether carrying on a trade, profession or business in Hong Kong Source of profits – service income
44	sections 14 and 20(2)	Whether carrying on a trade, profession or business in Hong Kong Tax liability of certain non-resident person

Change of accounting date

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
2	section 18E	Change of accounting date Entities commencing business on or after 1 April 1974
3	section 18E	Change of accounting date Entities commencing business before 1 April 1974
17	section 18E	Change of accounting date Entities commencing business on or after 1 April 1974
18	section 18E	Change of accounting date Entities commencing business on or after 1 April 1974 and entities commencing business before 1 April 1974
20	section 18E	Change of accounting date Entities commencing business on or after 1 April 1974
24	section 18E	Change of accounting date Entities commencing business on or after 1 April 1974
29	section 18E	Change of accounting date Entities commencing business on or after 1 April 1974 and entities commencing business before 1 April 1974 Applicability of section 61A
38	section 18E	Change of accounting date Entities commencing business on or after 1 April 1974 and entities commencing business before 1 April 1974 Applicability of section 61A
39	section 18E	Change of accounting date Entities commencing business on or after 1 April 1974
41	section 18E	Change of accounting date Entities commencing business on or after 1 April 1974
42	section 18E	Change of accounting date Entities commencing business before 1 April 1974
49	section 18E	Change of accounting date Entities commencing business on or after 1 April 1974
51	section 18E	Change of accounting date Entities commencing business on or after 1 April 1974 and entities commencing business before 1 April 1974 Applicability of section 61A
63	section 18E	Change of accounting date Entities commencing business on or after 1 April 1974

Charter hire income

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
31	sections 23B(3) and 23B(12)	Chargeability of charter hire income

Contracts deemed as leases

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
28	sections 14(1), 16(1), 16(1)(ga), 16F(1), 16G(1), 18F(1), 33A(1), 34(1), 34(2), 39B(1) and 39B(2)	Contracts deemed as leases under HKAS17 and HKFRS-Int 4

Court-free company amalgamation

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Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
55	sections 14, 16, 19C, 51, 61A and 61B	Court-free company amalgamation Applicability of sections 61A and 61B Treatment of loss Deductibility of interest expense
56	sections 14, 33A, 35, 39B, 39D, 51, 61 and 61A	Court-free company amalgamation Applicability of sections 61 and 61A Claim for allowance Obligation to file tax returns
57	sections 19C, 61A and 61B	Court-free company amalgamation Applicability of sections 61A and 61B Treatment of loss
58	sections 14, 19C(4), 51(1), 61A and 61B	Court-free company amalgamation Treatment of loss Obligation to file tax returns Applicability of sections 61A and 61B
59	sections 14, 19C(4), 51(1), 61, 61A and 61B	Court-free company amalgamation Treatment of loss Obligation to file tax returns Applicability of sections 61, 61A and 61B
61	sections 14, 19C(4), 51(1), 61A and 61B	Court-free company amalgamation Treatment of loss Obligation to file tax returns Applicability of sections 61A and 61B
62	sections 14, 33A, 35, 39B, 39D, 51, 61 and 61A	Court-free company amalgamation Claim for allowance Obligation to file tax returns Applicability of sections 61 and 61A
64	sections 14, 19C(4), 51(1), 61, 61A and 61B	Court-free company amalgamation Treatment of loss Obligation to file tax returns Applicability of sections 61, 61A and 61B
65	sections 14, 19C(4), 33A, 35, 39B, 39D, 51(1), 61, 61A and 61B	Court-free company amalgamation Treatment of loss Claim for allowance Obligation to file tax returns Applicability of sections 61, 61A and 61B

Employee's share-based benefits

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
22	sections 8 and 9(1)	Employee's share-based benefits
32	sections 9(1) and 52	Employee's share-based benefits Employer's obligations
33	sections 8, 9 and 16(1)	Employee's share-based benefits Deductibility of contribution by employer

Foreign-sourced income exemption

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
68	section 15K	Economic substance requirement – foreign-sourced dividend
69	section 15K	Economic substance requirement – foreign-sourced dividend
70	section 15K	Economic substance requirement – foreign-sourced dividend
72	sections 15H, 15M and 15N	Whether foreign-sourced dividend is received in Hong Kong Participation requirement Subject to tax condition
74	sections 15H, 15I, 15M and 15N	Whether a company incorporated in Hong Kong is an MNE entity and a Hong Kong resident person Applicability of section 15I Participation requirement Subject to tax condition
75	sections 15H and 15I	Whether foreign-sourced dividend is received in Hong Kong

Income from life insurance products

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
9	sections 14, 16 and 23(1)(a)	A life insurance corporation Whether sum received is "premium from life insurance premium" Deductibility of certain expenses Ascertainment of assessable profits

Loan Securitisation

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
71	sections 14, 16(1), 16(1)(d), 16‍(‍2‍)‍(‍c‍)‍, 16‍(‍2‍)‍(‍f‍)‍(‍i‍) and 18K(3)	Chargeability of interest income Deductibility of interest expenses Deductibility of impairment loss or bad debt

Management and licence fees of professional practices

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
6	sections 16 and 22(3)	Deductibility of certain expenses Assessment of partnership

Permanent establishment

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
66	section 50AAC and schedule 17G	Permanent establishment

Sale of business

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
5	sections 14 and 61A	Sale of business Capital or revenue receipts Applicability of section 61A

Severance payment received by employee

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
25	sections 8 and 9	Severance payment received by employee Employer's obligations

Source of interest income

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
50	sections 14 and 15(1)(f)	Source of interest income
53	sections 14 and 15(1)(f)	Source of interest income

Source of profits

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
4	section 14	Source of profits – trading
8	section 14	Source of profits – trading
10	section 14	Source of profits – trading Profits not eligible for apportionment
11	section 14	Source of profits – trading
12	section 14	Source of profits – trading
19	section 14	Source of profits – manufacturing Apportionment of profits on 50:50 basis
21	section 14	Source of profits – trading
23	section 14	Source of profits – service income
30	section 14	Source of profits – service income
34	section 14	Source of profits – trading
35	section 14	Source of profits – trading
36	section 14	Source of profits – service income
37	section 14	Source of profits – trading
40	section 14	Source of profits – trading
43	section 14	Source of profits – trading
45	section 14	Source of profits – service income
46	section 14	Source of profits – service income
48	sections 14 and 16	Source of profits – trading Deductibility of associated expenses
54	section 14	Source of profits – trading
60	sections 14 and 26(a)	Source of profits Exclusion of dividend income

Tax concessions for family-owned investment holding vehicles

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
73	sections 9(2), 16(2), 22, 23, 26 and 27 of Schedule 16E and sections 15H(1), 15K, 61 and 61A	Tax concessions for a family-owned investment holding vehicle and a family-owned special purpose entity Applicability of anti-round tripping provisions Applicability of anti-avoidance provisions Whether foreign-sourced interest, dividend, or disposal gain derived is a specified foreign-sourced income Economic substance requirement – specified foreign-sourced income

Tax liability of non-resident person

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
14	section 20(2)	Tax liability of certain non-resident person
27	section 20(2)	Tax liability of certain non-resident person

Treatment of losses upon restructuring, change in shareholding and merger

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
1	sections 19C and 61B	Change in shareholding Treatment of losses Utilization of losses to avoid tax
7	sections 19C and 61A	Business restructuring Treatment of losses Applicability of section 61A
15	section 19C(4)	Treatment of losses upon merger
52	sections 19C, 61, 61A and 61B	Change in shareholding Treatment of losses Applicability of sections 61, 61A and 61B

Waiver of loans

Case No.	Provision of the I.R.O. in respect of which ruling applies	Index
47	sections 14(1), 15(1)(c), 15(2), 61 and 61A	Whether profits from business Whether deemed trading receipts Applicability of sections 61 and 61A
67	sections 14(1), 15(1)(c), 15(2), 61 and 61A	Whether profits from business Whether deemed trading receipts Applicability of sections 61 and 61A