Section 14 of Inland Revenue Ordinance sets out the basic charge to profits tax. In addition, Section 15 deems the following to be taxable trading receipts.
(1) |
Money received or receivable from the exhibition or use in Hong Kong of cinematography or television film or tape, any sound recording or any advertising materials connected with such film, tape, or recording [Section 15(1)(a)] . |
(2) |
Money received or receivable for the use or right to use in Hong Kong a patent, design, trademark, copyright material or secret process or formula or other of a similar nature [Section 15(1)(b)] . |
(3) |
Money received or receivable for the use or right to use outside Hong Kong a patent, design, trademark, copyright material or secret process or formula or other of a similar nature if the payment for such are deductible under profits tax . [Section 15(1)(ba)] . |
(4) |
Money received or receivable by or accrued to a person carrying on business in Hong Kong by way of grant, subsidy or similar financial assistance other than sums in connection with capital expenditure [Section 15(1)(c)] . |
(5) |
Money received or receivable by way of hire, rental or similar charges for the use of movable property or the right to use movable property in Hong Kong [Section 15(1)(d)] . |
The deeming provisions of Section 15(1)(a) and Section 15(1)(b) apply only where the transactions cannot be caught by the basic charge. In other words, they will not apply to those transactions that have already been assessable under Section 14. In general, they apply to non-residents who do not carry on a trade or a business in Hong Kong. Money received includes lump sum payments or periodical payments. The assessable profits under these two provisions are further deemed to be 30% of the money received.
The deeming provisions of Section 15(1)(c), Section 15(1)(d) and Section 15(1)(ba) do not stipulate an assessable-profits rate. In other words, the actual net amounts received or receivable will be taken into the assessable profits. The deeming provision of Section 15(1)(c) concerns only those persons carrying on a trade or business in Hong Kong. However, the deeming provision of Section 15(1)(d) targets those persons who do not carry on a trade or business in Hong Kong. |
