Hong Kong Ordinances

INLAND REVENUE ORDINANCE - SECT 15

Certain amounts deemed trading receipts

(Past version on 01/12/2000).
(Past version on 30/06/1997).

(1) For the purposes of this Ordinance, the sums described in the following
paragraphs shall be deemed to be receipts arising in or derived from Hong Kong
from a trade, profession or business carried on in Hong Kong-

   (a)  sums, not otherwise chargeable to tax under this Part, received by or
        accrued to a person from the exhibition or use in Hong Kong of
        cinematograph or television film or tape, any sound recording, or any
        advertising material connected with such film, tape or recording;

   (b)  sums, not otherwise chargeable to tax under this Part, received by or
        accrued to a person for the use of or right to use in Hong Kong any
        patent, design, trademark, copyright material, secret process or
        formula or other property of a similar nature, or for imparting or
        undertaking to impart knowledge directly or indirectly connected with
        the use in Hong Kong of any such patent, design, trademark, copyright
        material, secret process or formula or other property; (Replaced 12 of
        2004 s. 5)

   (ba) sums, not otherwise chargeable to tax under this Part, received by or
        accrued to a person for the use of or right to use outside Hong Kong
        any patent, design, trademark, copyright material, secret process or
        formula or other property of a similar nature, or for imparting or
        undertaking to impart knowledge directly or indirectly connected with
        the use outside Hong Kong of any such patent, design, trademark,
        copyright material, secret process or formula or other property, which
        are deductible in ascertaining the assessable profits of a person
        under this Part; (Added 12 of 2004 s. 5)

   (c)  sums received by or accrued to a person by way of grant, subsidy or
        similar financial assistance in connection with the carrying on of a
        trade, profession or business in Hong Kong, other than sums in
        connection with capital expenditure made or to be made by the person;

   (d)  sums received by or accrued to a person by way of hire, rental or
        similar charges for the use of movable property in Hong Kong or the
        right to use movable property in Hong Kong;

   (e)  (Repealed 7 of 1975 s. 7)

   (f)  sums received by or accrued to a corporation carrying on a trade,
        profession or business in Hong Kong by way of interest derived from
        Hong Kong; (Replaced 19 of 1986 s. 2)

   (g)  sums received by or accrued to a person, other than a corporation,
        carrying on a trade, profession or business in Hong Kong by way of
        interest derived from Hong Kong which interest is in respect of the
        funds of the trade, profession or business; (Replaced 19 of 1986 s. 2.
        Amended 17 of 1989 s. 4)

   (h)  sums received by or accrued to a person as a refund to the person of-

   (i)  contributions paid as an employer to a recognized occupational 
        retirement scheme; or

        (ii)   voluntary contributions paid as an employer to a mandatory 
               provident fund scheme, but only to the extent that the sums are
               allowed as deductions in ascertaining the person's
               assessable profits under this Part; (Replaced 4 of 1998 s. 6)

        (i)    sums, not otherwise chargeable to tax under this Part, received
               by or accrued to a financial institution by way of interest
               which arises through or from the carrying on by the
               financial institution of its business in Hong Kong,
               notwithstanding that the moneys in respect of which the
               interest is received or accrues are made available outside Hong
               Kong; (Added 73 of 1978 s. 3)

   (j)  sums received by or accrued to a corporation carrying on a trade,
        profession or business in Hong Kong by way of gains or profits 
        arising in or derived from Hong Kong from the sale or other disposal
        or on the redemption on maturity or presentment of a
        certificate of deposit or bill of exchange; (Replaced 19 of 1986 s. 2)

   (k)  sums received by or accrued to a person, other than a corporation,
        carrying on a trade, profession or business in Hong Kong by way of
        gains or profits arising in or derived from Hong Kong from the sale or
        other disposal or on the redemption on maturity or presentment of a
        certificate of deposit or bill of exchange where such gains or profits
        are in respect of the funds of the trade, profession or business;
        (Replaced 19 of 1986 s. 2. Amended 28 of 1987 s. 3; 17 of 1989 s. 4)

   (l)  sums, not otherwise chargeable to tax under this Part, received by or
        accrued to a financial institution by way of gains or profits arising
        through or from the carrying on by the financial institution of its
        business in Hong Kong from the sale or other disposal or on the
        redemption on maturity or presentment of a certificate of deposit or
        bill of exchange notwithstanding that-

        (i)    the moneys laid out for the acquisition of the certificate or
               bill were made available outside Hong Kong; or

        (ii)   the sale, disposal or redemption is effected outside Hong Kong;
               and (Added 19 of 1986 s. 2. Amended 28 of 1987 s. 3)

   (m)  sums received or receivable by a person as consideration in respect of
        the transfer of a right to receive income, as provided for in
        section 15A. (Added 28 of 1987 s. 3)

(1A) Subsection (1)(j) or (k) shall not apply to gains or profits 
arising in or derived from Hong Kong, other than gains or profits received by
or accrued to a person whose trade, profession or business comprises or
includes trading in certificates of deposit or bills of exchange, to the
extent to which such gains or profits relate to a period prior to 1 April
1981; and gains or profits received by or accrued to any person from the sale
or other disposal or on the redemption on maturity or presentment, on or after
1 April 1981, of a certificate of deposit or bill of exchange purchased or
otherwise acquired by that person before that date, shall be determined by
reference to such amount as the Commissioner may consider such
certificate of deposit or bill of exchange would have realized if it had been
sold in the open market at the close of business on 31 March 1981 and not by
reference to the amount, if any, paid by that person in so purchasing or
otherwise acquiring such certificate of deposit or bill of exchange. (Added 30
of 1981 s. 3)

(1B) (Repealed 36 of 1984 s. 3)

(2) Where, in ascertaining for the purposes of this Part the profits of a
trade, profession or business carried on in Hong Kong, a deduction has been
allowed for any debt incurred for the purposes of the trade, profession or
business, then, if the whole or any part of that debt is thereafter released,
the amount released shall be deemed to be a receipt of the trade, profession
or business arising in or derived from Hong Kong at the time when the release
was effected.

(3) Where in the basis period for any year of assessment a
financial institution was not a financial institution for the whole of that
period, in that, if the institution is a bank it was not licensed for the
whole of that period or if the institution is a deposit-taking company it was
not registered for the whole of that period, then subsection (1)(i) and (l)
shall apply only in respect of such part of the basis period during which the
bank or deposit-taking company was licensed or registered, as the case may be.
(Added 73 of 1978 s. 3. Amended 19 of 1986 s. 2)

(4) The amendments to this section effected by the Inland Revenue (Amendment)
Ordinance 1984 (36 of 1984) shall not have the effect of rendering chargeable
to tax sums received or accrued to any person prior to 1 April 1984 which were
not chargeable to tax immediately prior to the coming into force of that
Ordinance. (Added 36 of 1984 s. 3)

(5) The amendments to this section effected by the Inland Revenue (Amendment)
(No. 2) Ordinance 1986 (19 of 1986) shall apply to sums received or accrued by
way of interest, gains or profits on or after 1 April 1986, and the provisions
of this section in force immediately prior to the coming into force of that
Ordinance shall continue to apply to such sums received or accrued prior to 1
April 1986 as if such amendments had not been enacted. (Added 19 of 1986 s. 2)

(6) The amendment made to subsection (1) by section 5(a)(ii) of the Inland
Revenue (Amendment) Ordinance 2004 (12 of 2004) does not apply to sums
described in subsection (1)(ba) which were received by or which accrued to a
person before the commencement* of that Ordinance. (Added 12 of 2004 s. 5)
(Replaced 2 of 1971 s. 9. Amended 7 of 1986 s. 12)
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* Commencement date: 25 June 2004.