Unit 1A - THE UNIVERSITY OF HONG KONG SCHOOL OF BUSINESS...

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U1A_Overview 1 THE UNIVERSITY OF HONG KONG SCHOOL OF BUSINESS BUSI 0018 – Hong Kong Taxation Unit 1A – An Overview of the Hong Kong Taxation System Coverage 1 Meaning and types of tax 2 Sources of Hong Kong tax law 3 Hong Kong taxation system and its common features 4 Schedular tax system 5 Introduction to the Inland Revenue Ordinance 6 Administrative bodies 7 Returns and information 8 Tax assessment Learning Objectives After completing this unit, you should be able to: explain the meaning of tax and identify the sources of Hong Kong's tax law describe the characteristics of the Hong Kong taxation system appreciate the composition of the Inland Revenue Ordinance describe the structure of the three tax administrative bodies in Hong Kong and their functions and powers state under what authority the officers in the Inland Revenue Department may ask for returns and information from a taxpayer and any other party state the obligations of taxpayers and employers imposed under the Inland Revenue Ordinance explain some basic terminology used in income tax 1 MEANING AND TYPES OF TAX 1.1 Meaning of Tax Oxford Dictionary - “Contribution levied on persons, property, or business, for support of government.” Inland Revenue Ordinance – S.2 - “Any tax imposed by the Inland Revenue Ordinance.”
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U1A_Overview 2 1.2 Types of Tax Revenue Direct Tax Tax demanded from the person to whom it is intended should pay it Inland Revenue Ordinance - salaries tax, property tax and profits tax Estate Duty Ordinance - estate duty (abolished in February 2006) Indirect Tax Tax demanded from one person in the expectation and intention that he will indemnify himself at the expense of another Hotel Accommodation Ordinance - hotel accommodation tax (waived w.e.f. 1 July 2008) Betting Duty Ordinance - betting duty Stamp Duty Ordinance - stamp duty (4 Heads of charge: HK immovable properties, HK stock, HK bearer instruments, duplicates and counterparts) 2 SOURCES OF HONG KONG TAX LAW Statute Law Inland Revenue Ordinance (Chapter 112) Inland Revenue (Amendment) Ordinance Inland Revenue Rules Case Law Hong Kong tax cases U.K. and Commonwealth countries tax cases Board of Review cases Others Inland Revenue Departmental Interpretation and Practice Notes (DIPN) 3 HONG KONG TAXATION SYSTEM AND ITS COMMON FEATURES Schedular tax system (see section 4 below) and no total income concept (exception – see Unit 6B Personal Assessment) Territorial source concept and no residence concept (exception) Direct assessment and no withholding tax (exception: e.g. s.15(1)(b), s.15(1)(ba) and s.20A – see Unit 7) Low tax rate, limited to standard rate No tax on dividend income No tax on capital gain (exception) Husband and wife treated as two independent persons (exception – see Unit 6A) Provisional tax assessment system
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U1A_Overview 3 4 SCHEDULAR TAX SYSTEM No total income concept
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Unit 1A - THE UNIVERSITY OF HONG KONG SCHOOL OF BUSINESS...

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