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)
