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Unformatted text preview: THE CHINESE UNIVERSITY OF HONG KONG School of Accountancy ACCT 3161 – Taxation (2 nd Term, 2010-2011) Assignment 3 Solution Question 1 (a) Contract processing. (b)(i) Contract processing: Under the contract processing agreement, the Hong Kong company is responsible for the supply of raw materials and machinery without consideration and to provide technical and managerial know-how. The Mainland processing enterprise is responsible for the provision of factory premises, utilities and labour force. In return for the processing service, the Hong Kong company pays a subcontracting charge to the Mainland enterprise. The legal title to the raw materials and finished goods remains with the Hong Kong company. (ii) Import processing: In import processing, the manufacturing operations are carried out by a foreign investment enterprise (FIE) related to the Hong Kong company. An FIE is often a separate legal entity incorporated in the Mainland. The Hong Kong company sells raw materials to the FIE and buys back incorporated in the Mainland....
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This note was uploaded on 02/04/2012 for the course ACCT 3161 taught by Professor Kwong during the Spring '11 term at CUHK.
- Spring '11