Hong Kong Ordinances

INLAND REVENUE ORDINANCE - SECT 26A

Exclusion of certain profits from tax

(Past version on 01/04/2003).
(Past version on 17/04/1998).
(Past version on 30/06/1997).

(1) For the purposes of this Part-

   (a)  interest paid or payable on a Tax Reserve Certificate issued by the
        Commissioner;

   (b)  interest paid or payable on a bond issued under the Loans  Ordinance (
        Cap 61) or the Loans (Government Bonds) Ordinance ( Cap 64); (Amended
        48 of 1991 s. 2)

   (c)  any profit on the sale or other disposal or on the redemption on
        maturity or presentment of such a bond; (Amended 48 of 1991 s. 2)

   (d)  interest paid or payable on an Exchange Fund debt instrument; (Added 9
        of 1990 s. 2. Amended 17 of 1992 s. 2)

   (e)  any profit on the sale or other disposal or on the redemption on
        maturity or presentment of such an Exchange Fund debt instrument;
        (Added 9 of 1990 s. 2)

   (f)  interest paid or payable on a Hong Kong dollar denominated
        multilateral agency debt instrument; (Added 17 of 1992 s. 2. Amended
        34 of 2003 s. 4)

   (g)  any profit on the sale or other disposal or on the redemption or
        maturity or presentment of such a Hong Kong dollar denominated
        multilateral agency debt instrument; (Added 17 of 1992 s. 2. Amended
        34 of 2003 s. 4)

   (h)  interest paid or payable on a long term debt instrument; and (Added 34
        of 2003 s. 4)

   (i)  any gain or profit on the sale or other disposal or on the redemption
        on maturity or presentment of a long term debt instrument, (Added 34
        of 2003 s. 4) shall not be included in the profits of any corporation
        or other person chargeable to tax under this Part. (Amended 9 of 1990
        s. 2)

(1A) (a) For the purposes of this Part, there shall not be included in the
profits to which a person is chargeable to tax under this Part any sums
received or accrued in respect of a specified investment scheme by or to the
person as-

        (i)    a person chargeable to tax under this Part in respect of a
               mutual fund, unit trust or similar investment scheme that is
               authorized as a collective investment scheme under section 104
               of the Securities and  Futures Ordinance ( Cap 571); or
               (Replaced 5 of 2002 s. 407)

        (ii)   a person chargeable to tax under this Part in respect of a
               mutual fund, unit trust or similar investment scheme where the
               Commissioner is satisfied that the mutual fund, unit trust or
               investment scheme is a bona fide widely held investment scheme
               which complies with the requirements of a supervisory authority
               within an acceptable regulatory regime. (Replaced 5 of 2002 s.
               407)

        (iii)  -(v) (Repealed 5 of 2002 s. 407)

   (b)  For the purposes of paragraph (a), a specified investment scheme is an
        investment scheme carried on-

        (i)    for the purposes for which the investment scheme was stated to
               be carried on in the constitutive documents approved in respect
               of the investment scheme by- (A) in the case of paragraph
               (a)(i), the Commission; (B) in the case of paragraph (a)(ii),
               the supervisory authority within the acceptable regulatory
               regime; and

        (ii)   in accordance with- (A) in the case of paragraph (a)(i), the
               requirements of the Commission; (B) in the case of paragraph
               (a)(ii), the requirements of the supervisory authority within
               the acceptable regulatory regime. (Replaced 32 of 1998 s. 17.
               Amended 5 of 2002 s. 407)

(2) In this section-

"Commission" (證監會) means the Securities and Futures Commission referred
to in section 3(1) of the Securities and Futures Ordinance ( Cap 571); (Added
32 of 1998 s. 17. Amended 5 of 2002 s. 407)

"computer" (電腦) means any device for storing, processing or retrieving
information;

"Exchange Fund" (外匯基金) means the fund of that name established under
section 3(1) of the Exchange Fund Ordinance ( Cap 66);

"Exchange Fund debt instrument" (外匯基金債務票據) means any
instrument (whether
described as an "Exchange Fund Bill" or otherwise) issued under the
Exchange Fund Ordinance ( Cap 66) evidencing the deposit of a sum of money in
Hong Kong currency with the Monetary Authority for the account of the
Exchange Fund, being an instrument which recognizes an obligation to pay a
stated amount, with or without interest, and which is transferable in a manner
specified by that Authority; (Amended 82 of 1992 s. 9)

"instrument" (票據) includes-

   (a)  every written document;

   (b)  any information recorded in the form of an entry in a book of account;
        and

   (c)  any information which is recorded (whether by means of a computer or
        otherwise) in a non-legible form but is capable of being reproduced in
        a legible form;

"long term debt instrument" (長期債務票據) means a debt instrument as
defined in section 14A that-

   (a)  is issued on or after 5 March 2003;

   (b)  has an original maturity of not less than 7 years or is undated; and

   (c)  cannot be redeemed within 7 years from the date of its issue; (Added
        34 of 2003 s. 4)

"multilateral agency debt instrument" (多邊代理機構債務票據) means
an instrument specified in Part I of Schedule 6 issued by a body specified in
Part II of that Schedule; (Added 17 of 1992 s. 2)

"mutual fund" (互惠基金) means any arrangement made for the purpose, or
having the effect, of providing facilities for investment in shares in a
corporation which is or hold itself out as being engaged primarily in the
business of investing, reinvesting or trading in securities and which is
offering for sale or has outstanding any redeemable shares of which it is the
issuer; (Added 5 of 2002 s. 407)

"unit trust" (單位信託) means any arrangement made for the purpose, or
having the effect, of providing facilities for the participation by persons,
as beneficiaries under a trust, in profits or income arising from the
acquisition, holding, management or disposal of securities or any other
property whatsoever. (Replaced 5 of 2002 s. 407)

(3) The Legislative Council may by resolution amend Schedule 6. (Added 17 of
1992 s. 2) (Replaced 62 of 1975 s. 3. Amended 32 of 1998 s. 17; 5 of 2002 s.
407)
___________________________________________________________________________
_____ Note: The amendments made by 34 of 2003 to section 26A(1) and (2) apply
in relation to the year of assessment commencing on 1 April 2003 and to all
subsequent years of assessment. (Please see 34 of 2003 s. 2)

"Commission" (證監會)

"computer" (電腦)

"Exchange Fund" (外匯基金)

"Exchange Fund debt instrument" (外匯基金債務票據)

"instrument" (票據) “long term debt instrument” (長期債務票據)

"multilateral agency debt instrument" (多邊代理機構債務票據)

"mutual fund" (互惠基金)

"unit trust" (單位信託)