Hong Kong Secretary for Commerce and Economic Development
Frederick Ma on Wednesday refuted calls to introduce "group loss
relief" and "loss carry-back" arrangements in the profits tax
regime, saying it could lead to abuse like tax avoidance.
He told the Legislative Council that complicated legislative
provisions would be needed to guard against the abuse, complicating
Hong Kong's simple tax system. Substantial resources would also be
required.
He said the Hong Kong Special Administrative Region government
has studied the proposal for the arrangements but considers that
they will 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.
(Xinhua News Agency January 31, 2008)
