Hong Kong Regulations

INLAND REVENUE RULES - RULE 3

Banks; Hong Kong branch offices

METHOD OF ASCERTAINMENT AND DETERMINATION OF THE PROFITS OF THE HONG KONG
BRANCH OF A BANK WHOSE HEAD OFFICE IS ELSEWHERE THAN IN HONG KONG

(1) In this rule-

"bank" (銀行) means any bank whose head office is elsewhere than in Hong
Kong;

"Hong Kong branch" (香港分行) means the business carried on in Hong Kong
by any such bank.

(2) Where any accounts prepared by a bank for its own purposes disclose, in
the opinion of the Assessor, the true profits of the Hong  Kong branch, the
assessable profits shall be computed on the basis of such accounts.

(3) Where no accounts are prepared which in the opinion of the Assessor
disclose the true profits of the Hong Kong branch, the following provisions
shall apply in the determination of such profits-

   (a)  the same proportion of the total profits of the bank as the assets of
        the Hong Kong branch bear to the total assets of the bank shall be
        treated as profits made from transactions in Hong Kong and shall be
        assessed accordingly;

   (b)  for the purposes of determining the total profits of the bank, similar
        adjustments for tax purposes will be made in the accounts of the bank
        as would have been necessary had the whole of those profits been
        liable to tax under this Ordinance;

   (c)  where the Assessor is of the opinion that it would be impracticable or
        inequitable to adopt the provisions of sub-paragraphs (a) and (b) of
        this paragraph, he may estimate the amount of the profits of the
        Hong Kong branch, and assess such profits accordingly: Provided that
        any decision of an Assessor under this rule shall be subject to
        objection and appeal in accordance with the provisions of Part XI of
        the Ordinance. (L.N. 101 of 1965)

(7 of 1986 s. 12)

"bank" (銀行)

"Hong Kong branch" (香港分行)