Cap. 112 《税務條例》Inland Revenue Ordinance

For the purposes of this Part the assessable profits of a person for sums received by or accrued to the person as—

are chargeable to tax under this Part at one-half of the rate specified in Schedule 1 or Schedule 8, as the case may be. (Amended 4 of 2011 s. 3)

In relation to—

subsection (1) does not apply in respect of any sums received by or accrued to a person as referred to in that subsection if, at the time the sums are so received or accrued, the person is an associate of the issuer of the debt instrument. (Added 4 of 2011 s. 3)

For the purposes of this Part—

received by or accrued to a person are not chargeable to tax under this Part. (Added 32 of 2018 s. 18)

Subsection (1B) does not apply in relation to a debt instrument if, at the time the interest or gain or profit relating to the debt instrument is received by or accrued to a person, the person is an associate of the issuer of the debt instrument. (Added 32 of 2018 s. 18)

(Repealed 32 of 1998 s. 4)

In this section— (Amended 34 of 2003 s. 3)

For the purposes of paragraph (c) of the definition of associated corporation in subsection (4), a corporation is not regarded as being under the control of the same person as is the issuer of a debt instrument issued on or after 25 March 2011 by reason only that— (Amended 32 of 2018 s. 18)

For the purposes of the definition of debt instrument in subsection (4), the Financial Secretary may by order—

in respect of a debt instrument issued by such person as may be specified in the order.

Section 21 of Schedule 17A (specified alternative bond scheme and its treatment under this Ordinance (other than Part 4AA)) provides for modifications to this section. (Added 10 of 2013 s. 6. Amended 21 of 2025 s. 33)

An amount of loss incurred or sustained by a person from a transaction in or related to a debt instrument issued on or after 1 April 2018 in a year of assessment cannot be set off against the person’s assessable profits for the year of assessment or any subsequent year of assessment. (Added 32 of 2018 s. 18)

To avoid doubt, paragraph (a) of the definition of debt instrument in subsection (4) as in force on the commencement date^@ of the Inland Revenue (Amendment) (No. 9) Ordinance 2018 (32 of 2018) applies to an instrument issued within the period from 1 April 2018 to the day before that commencement date^@. (Added 32 of 2018 s. 18)

In this Subdivision—

References in section 14B to a series of transactions include a number of transactions each entered into (whether or not one after the other) in pursuance of, or in relation to, the same matter.

For the purposes of section 14B(2A), a series of transactions is not prevented from being regarded as a series of transactions by means of which a corporation sells or purchases insurance or reinsurance to or from any person, even if one or more of the following applies—

The Secretary for Financial Services and the Treasury may by notice published in the Gazette amend Schedule 49.

A note located in the text of this section is provided for information only and has no legislative effect.

For the purposes of this Part, the assessable profits of a corporation are, subject to subsection (2) and section 26AB, chargeable to tax under this Part at one-half of the rate specified in Schedule 8 to the extent to which those profits are— (Amended 3 of 2014 s. 4; 27 of 2018 s. 25)

Subsection (1) applies to a corporation for a year of assessment only if—

Subsection (1)(c) does not apply to the assessable profits of a corporation derived from a transaction or a series of transaction if—

An election under subsection (2)(b), once made, is irrevocable. (Added 27 of 2018 s. 25)

(Repealed 15 of 2020 s. 5)

In this section and sections 14D, 14E and 14F—

(Amended 27 of 2018 s. 26)

For the purposes of the definition of associated corporation in subsection (1), a person has control over a corporation if the person has the power to secure—

that the affairs of the first-mentioned corporation are conducted in accordance with the wishes of that person.

(Repealed 27 of 2018 s. 26)

The Secretary for Financial Services and the Treasury may by order published in the Gazette amend Schedule 17B.

For the purposes of this Part, the assessable profits of a corporation that is a qualifying corporate treasury centre for a year of assessment are, subject to subsection (5) and section 26AB, chargeable to tax under this Part at one-half of the rate specified in Schedule 8 to the extent to which those profits are— (Amended 27 of 2018 s. 27)

A corporation is a qualifying corporate treasury centre for a year of assessment if, for that year of assessment—

The conditions specified for the purposes of subsection (2)(a) are that, in the basis period for the year of assessment, the corporation—

For the purposes of subsection (3)(b), in determining whether a corporation has carried out any activity other than a corporate treasury activity, only activities that generate income to the corporation are to be taken into account.

Subsection (1) applies to a corporation for a year of assessment only if—

An election under subsection (5)(b), once made, is irrevocable.

If subsection (1) does not apply to a corporation for a year of assessment (cessation year) while it did for the previous year of assessment—

For the purposes of section 14D(2)(b), a corporation satisfies the safe harbour rule for a year of assessment (subject year) if the corporation falls within—

A corporation falls within the 1-year safe harbour if, for the subject year—

A corporation falls within the multiple-year safe harbour if, for the specified years—

In subsections (3), (7) and (8), the specified years (指明年度) for a corporation means—

The CTP percentage (企業財資利潤總額百分率) of a corporation for a year of assessment is calculated in accordance with the following formula—

The CTA percentage (企業財資資產總值百分率) of a corporation for a year of assessment is calculated in accordance with the following formula—

The average CTP percentage (企業財資利潤總額平均百分率) of a corporation for the specified years means the percentage arrived at by—

The average CTA percentage (企業財資資產總值平均百分率) of a corporation for the specified years means the percentage arrived at by—

For the purposes of subsection (6), in computing the aggregate value of the corporate treasury assets of a corporation, if a corporate treasury asset is used partly to carry out a corporate treasury activity and partly for another purpose, only the part of the value of the asset that is proportionate to the extent to which the asset is used to carry out a corporate treasury activity is to be taken into account.

For the purposes of section 14D(2)(c), the Commissioner may, on application by a corporation, determine that the corporation is a qualifying corporate treasury centre for a year of assessment.

A corporation may apply for the Commissioner’s determination under subsection (1) only if—

The Commissioner may make a determination under subsection (1) only if the Commissioner is of the opinion that the conditions specified in section 14D(3), or the safe harbour rule under section 14E, would, in the ordinary course of business of the corporation, have been satisfied for the year of assessment.

In this Subdivision— (Amended 10 of 2022 s. 2)

For the purposes of the definitions of associate, associated corporation and connected person in subsection (1)—

For the purposes of the definition of funding lease in subsection (1), an arrangement does not fall within paragraph (a)(iii) of that definition if, in the opinion of the Commissioner, the property in the aircraft concerned would reasonably be expected not to pass to the lessee, or an associate of the lessee, under the arrangement at the end of its term. (Replaced 5 of 2024 s. 3)

(Repealed 5 of 2024 s. 3)

In the definition of own in subsection (1), a reference to a hire-purchase agreement or conditional sale agreement does not include one under which, in the opinion of the Commissioner, the property in the aircraft concerned would reasonably be expected not to pass to the bailee or buyer (as the case may be). (Amended 5 of 2024 s. 3)

An aircraft leasing activity carried out by a corporation in respect of an aircraft is a qualifying aircraft leasing activity if the activity is carried out in the ordinary course of the corporation’s business carried on in Hong Kong. (Replaced 5 of 2024 s. 3)

An aircraft leasing management activity carried out by a corporation in respect of an aircraft is a qualifying aircraft leasing management activity if—

An arrangement (specified arrangement) is a sublease of an aircraft if—

A note located in the text of this section is provided for information only and has no legislative effect.

For the purposes of this Part and subject to subsections (4) and (6), the assessable profits of a corporation that is a qualifying aircraft lessor for a year of assessment are chargeable to tax under this Part at one-half of the rate specified in Schedule 8 to the extent to which those profits are assessable profits derived from its qualifying aircraft leasing activity. (Amended 27 of 2018 s. 28; 5 of 2024 s. 4)

A corporation is a qualifying aircraft lessor for a year of assessment if, in the basis period for that year of assessment—

For the purposes of subsection (2)(c), in determining whether a corporation has carried out any activity other than a qualifying aircraft leasing activity, only activities that generate income to the corporation are to be taken into account.

Subsection (1) applies to a corporation for a year of assessment only if—

An election under subsection (4)(b), once made, is irrevocable.

If subsection (1) does not apply to a corporation for a year of assessment (cessation year) while it did for the previous year of assessment—

If subsection (1) applies to a corporation for a year of assessment, the corporation is not entitled to be granted any allowance under Part 6 for that year of assessment in respect of the capital expenditure incurred on the provision of the aircraft concerned.

An aircraft owned by a corporation is to be treated as a capital asset of the corporation for the purposes of this Part if—

In this section—

For the purposes of section 14H(4)(a)(ii), an activity producing the assessable profits of a corporation that fall within section 14H(1) for a year of assessment is not considered to be carried out in Hong Kong by the corporation or arranged by the corporation to be carried out in Hong Kong in that year of assessment unless the requirements prescribed in section 5 of Schedule 17F (prescribed requirements) are met.

To avoid doubt, the fact that the prescribed requirements are not met does not imply that the assessable profits mentioned in subsection (1) do not arise in or are not derived from Hong Kong.

This section applies to a corporation for a year of assessment if section 14H(1) applies to the corporation for that year of assessment (particular year).

The assessable profits of the corporation that are chargeable to tax under this Part at the rate specified in section 14H(1) (qualifying profits) for the particular year is to be calculated in accordance with the following formula—

In this section—

Subject to section 14IA, this section applies to a corporation for a year of assessment (particular year) if—

The assessable profits of the corporation derived from the qualifying aircraft leasing activity relating to the operating lease for the particular year are to be the net lease payments for the right to use the aircraft under the operating lease (NLP). (Added 5 of 2024 s. 6)

The NLP is to be calculated in accordance with the following formula— (Amended 5 of 2024 s. 6)

(Repealed 5 of 2024 s. 6)

If the aircraft is leased together with other dealings in pursuance of one bargain, then for calculating the NLP, the Commissioner must, having regard to all the circumstances of the bargain, allocate an amount of gross lease payments for the right to use the aircraft under the lease.

If subsection (2) applies, the relevant outgoings and expenses may not be claimed for deduction under this Part otherwise than for calculating the NLP under that subsection.

Section 14I does not apply to a corporation for a year of assessment in respect of a qualifying aircraft leasing activity carried out by the corporation in relation to an operating lease of an aircraft (specified aircraft) if—

An election under subsection (1)(e), once made, is irrevocable.

For the purposes of subsection (1)(b), an allowance under Part 6 is to be regarded as not being or having been granted to a relevant person in respect of any capital expenditure incurred on the provision of the specified aircraft if an amount equal to the allowance has been charged to profits tax as balancing charge made on the relevant person.

Subsection (1)(c) does not apply to capital allowances granted to a relevant person in a non-Hong Kong jurisdiction (as described in that subsection) if Condition 1 or Condition 2 is satisfied in relation to the year of assessment.

Condition 1 is that—

Condition 2 is that—

Subsection (1)(d) does not apply if—

For the purposes of subsection (7)(b), an allowance is to be regarded as not being or having been granted if the end-user disclaims the allowance by giving the Commissioner a written notice within—

In this section—

For the purposes of this section, a specified event occurs in respect of an aircraft in a year of assessment if—

This section applies to a corporation for a year of assessment (particular year) if—

Condition 1 is that—any qualifying aircraft leasing activity carried out by the corporation in the particular year relates to an operating lease of an aircraft acquired by the corporation in a year of assessment beginning on or after 1 April 2023.

Condition 2 is that—

Condition 3 is that—

The assessable profits derived from the qualifying aircraft leasing activity mentioned in subsection (2), (3)(a) or (4)(a), as the case requires, are to be the net lease payments for the right to use the aircraft under the lease concerned (NLP).

The NLP is to be calculated in accordance with the following formula—

If the aircraft is leased together with any other dealings in pursuance of one bargain, then for calculating the NLP, the Commissioner must, having regard to all the circumstances of the bargain, allocate an amount of gross lease payments for the right to use the aircraft under the lease.

If subsections (5) and (6) apply—

In this section—

Despite section 17, this section applies to a corporation for a year of assessment (particular year) if—

Subject to section 14IF, the specified capital expenditure incurred in relation to the specified aircraft in the particular year (SCE) is deductible for the corporation for that year.

If the particular year is the first year of assessment for which section 14IB applies to the specified aircraft, the SCE is to be determined in accordance with the formula in section 14ID(2).

If the particular year is any other year of assessment for which section 14IB applies to the specified aircraft, the SCE is to be determined in accordance with the formula in section 14IE(2).

If the SCE has been allowed to be deducted under this section for a corporation, the corporation is not entitled to be granted any allowance under Part 6 in respect of the capital expenditure (aircraft) incurred by the corporation in relation to the aircraft concerned.

In this section—

This section applies for the purposes of section 14IC(3).

The formula referred to in section 14IC(3) is—

For the purposes of subsection (2), the NA is the sum of the total amount determined under paragraph (a) and the total amount determined under paragraph (b)—

For the purposes of subsection (2), subject to subsection (6), the relevant amount of capital allowances granted to a relevant person in a jurisdiction outside Hong Kong (non-Hong Kong jurisdiction) is to be determined in accordance with the following formula—

For the purposes of subsection (4), G is taken to be zero if H is equal to or less than I.

If—

the relevant person is to be regarded as not being granted any relevant amount of capital allowances in the non-Hong Kong jurisdiction.

In this section—

For the purposes of this section, a year of assessment is a section 14I-related year in relation to a corporation to which this section applies if section 14I has applied to the corporation because of the specified aircraft for the year of assessment.

For the purposes of this section, a tax is a specific tax if it is a tax of substantially the same nature as tax imposed under this Part.

For the purposes of this section, a year of assessment is a specific year in relation to a corporation to which this section applies if the specified aircraft has not been used at any time during the year of assessment for producing chargeable profits of the corporation.

For the purposes of this section, in calculating the total amount of capital expenditure (aircraft) incurred in the particular year by the corporation in relation to the specified aircraft—

This section applies for the purposes of section 14IC(4).

The formula referred to in section 14IC(4) is—

For the purposes of subsection (2), subject to subsection (5), the relevant amount of capital allowances granted to a relevant person in a jurisdiction outside Hong Kong (non-Hong Kong jurisdiction) is to be determined in accordance with the following formula—

For the purposes of subsection (3), M is taken to be zero if N is equal to or less than P.

If—

the relevant person is to be regarded as not being granted any relevant amount of capital allowances in the non-Hong Kong jurisdiction.

In this section—

For the purposes of this section, a tax is a specific tax if it is a tax of substantially the same nature as tax imposed under this Part.

For the purposes of this section, in calculating the total amount of capital expenditure (aircraft) incurred in the particular year by the corporation in relation to the specified aircraft—

Section 14IC does not apply to a corporation in relation to an aircraft (specified aircraft) for a year of assessment if—

Subsection (1)(b) does not apply if—

For the purposes of subsection (2)(b), an allowance is to be regarded as not being or having been granted if the end-user disclaims the allowance by giving the Commissioner a written notice within—

In this section—

This section applies for the purposes of sections 14IC, 14ID, 14IE and 14IF.

Any capital expenditure incurred by a corporation in relation to an aircraft is capital expenditure (aircraft) in relation to the aircraft.

Capital expenditure incurred by a corporation in relation to an aircraft includes—

However, neither the expenditure mentioned in paragraph (a) nor the expenditure mentioned in paragraph (b) is capital expenditure incurred by a corporation in relation to an aircraft—

If the aircraft is acquired together with any other assets in pursuance of one bargain, then for determining the actual amount of the consideration for the acquisition, the Commissioner must, having regard to all the circumstances of the bargain, allocate an amount of the consideration for the acquisition of the aircraft.

If the Commissioner is of the opinion that the consideration for the acquisition of the aircraft does not represent the true market value of the aircraft at the time of the acquisition—

If a corporation begins to use an aircraft, for the carrying out of any qualifying aircraft leasing activity, in a particular year of assessment after the year of assessment in which the acquisition takes place, any capital expenditure (aircraft) incurred in relation to the aircraft by the corporation before the particular year of assessment is to be regarded as being incurred by the corporation in the particular year of assessment by the corporation.

If any capital expenditure (aircraft) in relation to the aircraft (expenditure) is incurred or regarded as being incurred in a year of assessment preceding the year of assessment beginning on 1 April 2023, the expenditure is taken to be incurred in the year of assessment beginning on 1 April 2023.

This section applies to a corporation if—

Despite the exclusion relating to the sale of capital assets in section 14, each of the following amounts in relation to the specified aircraft is to be regarded as a trading receipt arising in or derived from Hong Kong in relation to the qualifying aircraft leasing activity of the corporation (trading receipt)—

However, if, in relation to the specified aircraft, the aggregate of the total amount of the IMOCs and the amount mentioned in subsection (2)(b) accrued or regarded as being accrued in a particular year exceeds the specified amount (SA), the excess amount is not regarded as any trading receipt of the corporation under subsection (2) for the particular year.

The SA—

Subject to subsection (6), the NA is to be the amount determined in accordance with the following formula—

If the aggregate NLP is equal to or less than zero, the NA is taken to be zero.

For a trading receipt that falls within the description in subsection (2)(a)—

For a trading receipt that falls within the description in subsection (2)(b)—

In this section—

This section applies to a corporation if—

This section also applies to a corporation if—

Despite the exclusion relating to the sale of capital assets in section 14, each of the following amounts in relation to an aircraft to which this section applies (specified aircraft) is to be regarded as a trading receipt arising in or derived from Hong Kong in relation to the qualifying aircraft leasing activity of the corporation (trading receipt)—

However, if, in relation to the specified aircraft, the aggregate of the total amount of the IMOCs and the amount mentioned in subsection (3)(b) accrued or regarded as being accrued in a particular year exceeds the specified amount (SA), the excess amount is not regarded as any trading receipt of the corporation under subsection (3) for the particular year.

The SA—

For a trading receipt that falls within the description in subsection (3)(a)—

For a trading receipt that falls within the description in subsection (3)(b)—

In this section—

This section applies to a corporation if—

Despite the exclusion relating to the sale of capital assets in section 14, each of the following amounts in relation to the specified aircraft is to be regarded as a trading receipt arising in or derived from Hong Kong in relation to the qualifying aircraft leasing activity of the corporation (trading receipt)—

However, if, in relation to the specified aircraft, the aggregate of the total amount of the IMOCs and the amount mentioned in subsection (2)(b) accrued or regarded as being accrued in a particular year exceeds the specified amount (SA), the excess amount is not regarded as any trading receipt of the corporation under subsection (2) for the particular year.

The SA—

For a trading receipt that falls within the description in subsection (2)(a)—

For a trading receipt that falls within the description in subsection (2)(b)—

In this section—

Subject to subsection (9), the NA in relation to a specified aircraft is to be determined in accordance with the following formula—

If the aggregate NLP is equal to or less than zero, the NA is taken to be zero.

This section applies for the purposes of sections 14IH, 14II and 14IJ.

For the purposes of section 14IH, subject to subsections (5) and (6), the actual amount of the consideration for a disposal of an aircraft by a corporation is to be determined in accordance with the following formula—

For the purposes of section 14II, subject to subsections (5) and (6), the actual amount of the consideration for a disposal of an aircraft by a corporation is—

For the purposes of section 14IJ, subject to subsections (5) and (6), the actual amount of the consideration for a disposal of an aircraft by a corporation is to be determined in accordance with the following formula—

If the aircraft is disposed of together with other assets in pursuance of one bargain, the Commissioner must, having regard to all the circumstances of the bargain, allocate an amount to be the actual amount of the consideration for the disposal.

If the Commissioner is of the opinion that the consideration for the disposal of the aircraft does not represent the true market value of the aircraft at the time of the disposal—

In this section—

For an aircraft of a corporation to which subsection (2), (3) or (4) applies, each completed month in respect of which section 14I applies to the corporation in relation to the aircraft is a section 14I-related month.

For an aircraft of a corporation to which subsection (3) or (4) applies, each completed month in respect of which section 14IB applies to the corporation in relation to the aircraft is a section 14IB-related month.

For the purposes of this section, the consideration for the sale or other disposal of an aircraft—

This section applies to a corporation for a year of assessment (particular year) if—

The assessable profits derived from the qualifying aircraft leasing activity mentioned in subsection (1)(a) are to be the net lease payments for the right to use the aircraft under the sublease (NLP).

The NLP is to be calculated in accordance with the following formula—

If the aircraft is subleased together with any other dealings in pursuance of one bargain, then for calculating the NLP, the Commissioner must, having regard to all the circumstances of the bargain, allocate an amount of gross lease payments for the right to use the aircraft under the sublease.

If subsections (2) and (3) apply—

In this section—

This section applies to a corporation for a year of assessment if section 14H(1) applies to the corporation, for that year of assessment, in relation to its assessable profits that are derived from the qualifying aircraft leasing activity relating to a funding lease of an aircraft.

The assessable profits of the corporation that are derived from the qualifying aircraft leasing activity carried out in relation to a funding lease of an aircraft for a year of assessment (particular year) are to be the net payments of finance charges or interest in relation to the right to use the aircraft under the lease (NP).

The NP is to be calculated in accordance with the following formula—

If an aircraft is leased together with any other dealings in pursuance of one bargain, the Commissioner must, having regard to all the circumstances of the bargain, allocate an amount of the lease income.

If subsections (2) and (3) apply—

In this section—

For the purposes of this Part and subject to subsections (5) and (7) and section 26AB, the assessable profits of a corporation that is a qualifying aircraft leasing manager for a year of assessment are chargeable to tax under this Part at one-half of the rate specified in Schedule 8 to the extent to which those profits are assessable profits derived from its qualifying aircraft leasing management activity. (Amended 27 of 2018 s. 29)

A corporation is a qualifying aircraft leasing manager for a year of assessment if—

For the purposes of subsection (2)(b)(i), the conditions are that, in the basis period for the year of assessment, the corporation—

For the purposes of subsection (3)(b), in determining whether a corporation has carried out any activity other than a qualifying aircraft leasing management activity, only activities that generate income to the corporation are to be taken into account.

Subsection (1) applies to a corporation for a year of assessment only if—

An election under subsection (5)(b), once made, is irrevocable.

If subsection (1) does not apply to a corporation for a year of assessment (cessation year) while it did for the previous year of assessment—

In this section—

For the purposes of section 14J(2)(b)(ii), a corporation satisfies the safe harbour rule for a year of assessment (subject year) if the corporation falls within—

A corporation falls within the 1-year safe harbour if, for the subject year—

A corporation falls within the multiple-year safe harbour if, for the specified years—

In this section, a reference to the specified years for a corporation is a reference to—

The ALMP percentage of a corporation for a year of assessment is calculated in accordance with the following formula—

The ALMA percentage of a corporation for a year of assessment is calculated in accordance with the following formula—

For the purposes of subsection (6), in computing the aggregate value of the aircraft leasing management assets of a corporation, if an aircraft leasing management asset is used partly to carry out a qualifying aircraft leasing management activity and partly for another purpose, only the part of the value of the asset that is proportionate to the extent to which the asset is used to carry out a qualifying aircraft leasing management activity is to be taken into account.

A reference to the average ALMP percentage of a corporation for the specified years is a reference to the percentage arrived at by—

A reference to the average ALMA percentage of a corporation for the specified years is a reference to the percentage arrived at by—

For the purposes of section 14J(2)(b)(iii), the Commissioner may, on application by a corporation, determine that the corporation is a qualifying aircraft leasing manager for a year of assessment.

A corporation may apply for the Commissioner’s determination under subsection (1) only if—

The Commissioner may make a determination under subsection (1) only if the Commissioner is of the opinion that the conditions specified in section 14J(3), or the safe harbour rule under section 14K, would, in the ordinary course of business of the corporation, have been satisfied for the year of assessment.

For the purposes of section 14J(5)(a)(ii), an activity producing the assessable profits of a corporation that fall within section 14J(1) for a year of assessment is not considered to be carried out in Hong Kong by the corporation or arranged by the corporation to be carried out in Hong Kong in that year of assessment unless the requirements prescribed in section 6 of Schedule 17F (prescribed requirements) are met.

To avoid doubt, the fact that the prescribed requirements are not met does not imply that the assessable profits do not arise in or are not derived from Hong Kong.

Subsection (2) applies if—

Any profits that, but for the conditions referred to in subsection (1)(a), would have accrued to the corporation or the person and, by reason of those conditions, have not so accrued, are to be included in the profits of the corporation or the person and taxed in accordance with this Part.

Subsection (4) applies if—

Any profits that, but for the conditions referred to in subsection (3)(a), would have accrued to the corporation or the person and, by reason of those conditions, have not so accrued, are to be included in the profits of the corporation or the person and taxed in accordance with this Part.

If—

this Subdivision is to have effect as if the corporation had ceased to own the aircraft during the time when the release arrangement is in force. (Amended 10 of 2022 s. 2)

In this Subdivision— (Amended 10 of 2022 s. 2)

For the purposes of the definitions of associate, associated corporation, associated partnership and connected person in subsection (1)—

For the purposes of the definition of funding lease in subsection (1), an arrangement does not fall within paragraph (c) of the definition if, in the opinion of the Commissioner, the property in the ship concerned would reasonably be expected not to pass to the lessee, or an associate of the lessee, under the arrangement at the end of its term.

In the definition of own in subsection (1), a reference to a hire-purchase agreement or conditional sale agreement does not include one under which, in the opinion of the Commissioner, the property in the ship concerned would reasonably be expected not to pass to the bailee or buyer (as the case may be).

A ship leasing activity carried out by a corporation in respect of a ship is a qualifying ship leasing activity if—

For the purposes of subsection (5)(b)(i), a ship’s gross tonnage is determined in accordance with the formula set out in regulation 6 of the Merchant Shipping (Registration) (Tonnage) Regulations (Cap. 415 sub. leg. C).

A ship leasing management activity carried out by a corporation in respect of a ship is a qualifying ship leasing management activity if—

A note located in the text of this Subdivision is provided for information only and has no legislative effect. (Amended 10 of 2022 s. 2)

For the purposes of this Part and subject to subsections (4) and (6), the assessable profits of a corporation that is a qualifying ship lessor for a year of assessment are chargeable to tax under this Part at the rate specified in Schedule 8C to the extent to which those profits are assessable profits derived from its qualifying ship leasing activity.

A ship lessor is a qualifying ship lessor for a year of assessment if, during the basis period for that year of assessment—

For the purposes of subsection (2)(c), in determining whether a ship lessor has carried out any activity other than a qualifying ship leasing activity, only activities that generate income to the ship lessor are to be taken into account.

Subsection (1) applies to a corporation for a year of assessment only if—

An election under subsection (4)(b), once made, is irrevocable.

If subsection (1) does not apply to a corporation for a year of assessment (cessation year) while it did for the previous year of assessment—

A ship owned by a corporation is to be treated as a capital asset of the corporation for the purposes of this Part if—

In this section—

If section 14P(1) applies to a corporation for a year of assessment, the corporation is not entitled to be granted any allowance under Part 6 for that year of assessment in respect of the capital expenditure incurred on the provision of the ship concerned.

If—

for the purposes of Part 6, the transfer is not treated as a sale of the ship concerned.

If section 14P(1) applies to a corporation for a year of assessment, and the qualifying ship leasing activity concerned relates to an operating lease, then the assessable profits of the corporation derived from the activity for that year of assessment are calculated in accordance with this section.

Unless subsection (3) applies, the net lease payments for the right to use a ship under the operating lease are to be calculated in accordance with the following formula—

A = (B – C) × D

If there are special circumstances in relation to a year of assessment, the net lease payments for the right to use a ship under the operating lease are to be calculated in accordance with the following formula—

A = B – C

For the purposes of subsection (3), there are special circumstances in relation to a year of assessment if, in relation to the year—

However, subsection (4)(e) does not apply if—

For the purposes of subsection (5)(b), an allowance is to be regarded as not having been granted if the end-user disclaims the allowance by giving the Commissioner a written notice within—

If a ship is leased under the operating lease together with other dealings in pursuance of one bargain, then for calculating the net lease payments under subsection (2) or (3), the Commissioner must, having regard to all the circumstances of the bargain, allocate an amount of gross lease payments for the right to use the ship under the lease.

The outgoings and expenses taken into account in calculating the net lease payments under this section may not otherwise be claimed for deduction under this Part.

In this section—

If section 14P(1) applies to a corporation for a year of assessment, and the qualifying ship leasing activity concerned relates to a funding lease, then the assessable profits of the corporation derived from the activity for that year of assessment are calculated in accordance with this section.

The net payments of finance charges or interest in relation to the right to use a ship under the funding lease are to be calculated in accordance with the following formula—

E = F – G

If a ship is leased under the funding lease together with other dealings in pursuance of one bargain, then for calculating the net payments of finance charges or interest under subsection (2), the Commissioner must, having regard to all the circumstances of the bargain, allocate an amount of gross payments of finance charges or interest in relation to the right to use the ship under the lease.

The outgoings and expenses taken into account in calculating the net payments of finance charges or interest under this section may not otherwise be claimed for deduction under this Part.

For the purposes of this Part and subject to subsections (5) and (7), the assessable profits of a corporation that is a qualifying ship leasing manager for a year of assessment are chargeable to tax under this Part at—

A ship leasing manager is a qualifying ship leasing manager for a year of assessment if—

For the purposes of subsection (2)(b)(i), the conditions are that, during the basis period for the year of assessment, the ship leasing manager—

For the purposes of subsection (3)(b), in determining whether a ship leasing manager has carried out any activity other than a qualifying ship leasing management activity, only activities that generate income to the ship leasing manager are to be taken into account.

Subsection (1) applies to a corporation for a year of assessment only if—

An election under subsection (5)(b), once made, is irrevocable.

If subsection (1) does not apply to a corporation for a year of assessment (cessation year) while it did for the previous year of assessment—

In this section—

For the purposes of section 14T(2)(b)(ii), a corporation satisfies the safe harbour rule for a year of assessment (subject year) if the corporation falls within—

A corporation falls within the 1-year safe harbour if, for the subject year—

A corporation falls within the multiple-year safe harbour if, for the specified years—

In this section, a reference to the specified years for a corporation is a reference to—

The SLMP percentage of a corporation for a year of assessment is calculated in accordance with the following formula—

The SLMA percentage of a corporation for a year of assessment is calculated in accordance with the following formula—

For the purposes of subsection (6), in computing the aggregate value of the ship leasing management assets of a corporation, if a ship leasing management asset is used partly to carry out a qualifying ship leasing management activity and partly for another purpose, only the part of the value of the asset that is proportionate to the extent to which the asset is used to carry out a qualifying ship leasing management activity is to be taken into account.

A reference to the average SLMP percentage of a corporation for the specified years is a reference to the percentage arrived at by—

A reference to the average SLMA percentage of a corporation for the specified years is a reference to the percentage arrived at by—

For the purposes of section 14T(2)(b)(iii), the Commissioner may, on application by a corporation, determine that the corporation is a qualifying ship leasing manager for a year of assessment.

A corporation may apply for the Commissioner’s determination under subsection (1) only if—

The Commissioner may make a determination under subsection (1) only if the Commissioner is of the opinion that the conditions specified in section 14T(3), or the safe harbour rule under section 14U, would, in the ordinary course of business of the corporation, have been satisfied for the year of assessment.

For the purposes of section 14P(4)(a)(ii), an activity producing the assessable profits of a corporation that fall within section 14P(1) for a year of assessment is not considered to be carried out in Hong Kong by the corporation or arranged by the corporation to be carried out in Hong Kong during the basis period for that year of assessment unless the threshold requirements are met.

For the purposes of section 14T(5)(a)(ii), an activity producing the assessable profits of a corporation that fall within section 14T(1) for a year of assessment is not considered to be carried out in Hong Kong by the corporation or arranged by the corporation to be carried out in Hong Kong during the basis period for that year of assessment unless the threshold requirements are met.

To avoid doubt, the fact that the threshold requirements are not met for the purposes of subsection (1) or (2) does not imply that the assessable profits mentioned in that subsection do not arise in or are not derived from Hong Kong.

In this section—

If section 14P(1) applies to a corporation for a zero-tax year of assessment, any loss sustained by the corporation in the year of assessment is not available for set off against any of its assessable profits for any subsequent year of assessment.

If section 14T(1)(b) applies to a corporation for a zero-tax year of assessment, any loss sustained by the corporation in the year of assessment is not available for set off against any of its assessable profits for the year of assessment or any subsequent year of assessment.

In this section—

Subsection (2) applies if—

Any profits that, but for the conditions referred to in subsection (1)(a), would have accrued to the corporation or the person and, by reason of those conditions, have not so accrued, are to be included in the profits of the corporation or the person and taxed in accordance with this Part.

Subsection (4) applies if—

Any profits that, but for the conditions referred to in subsection (3)(a), would have accrued to the corporation or the person and, by reason of those conditions, have not so accrued, are to be included in the profits of the corporation or the person and taxed in accordance with this Part.

If—

sections 14P(1) and 14T(1) do not apply in relation to any assessable profits accrued to the corporation during a basis period relevant to the arrangement.

If—

section 14P(1) does not apply in relation to any assessable profits accrued to the corporation during a basis period relevant to the arrangement.

For the purposes of this section, the basis period of a year of assessment is relevant to an arrangement if, in the opinion of the Commissioner, the arrangement has effect during that basis period.

In this section—

In this Subdivision—

Also, Part 1 of Schedule 17FB contains interpretation provisions that apply to this Subdivision in accordance with their terms.

A ship agency activity carried out by a corporation is a qualifying ship agency activity if the activity is carried out in the ordinary course of the corporation’s business carried on in Hong Kong.

A note located in the text of this Subdivision is provided for information only and has no legislative effect.

For the purposes of this Part and subject to subsections (7) and (9), the assessable profits of a corporation that is a qualifying ship agent for a year of assessment are chargeable to tax under this Part at—

In ascertaining the assessable profits of a corporation for the purposes of subsection (1), there are to be excluded, to the extent specified in subsection (3), any profits derived by the corporation from its qualifying ship agency activity that is carried out—

The extent specified for subsection (2) is the extent to which the activity mentioned in paragraph (b) of that subsection generates income—

A corporation is a qualifying ship agent for a year of assessment if, for the year of assessment—

The conditions specified for subsection (4)(a) are—

during the basis period for the year of assessment.

For the purposes of subsection (5)(b), in determining whether a corporation has carried out any activity other than a qualifying ship agency activity, only activities that generate income to the corporation are to be taken into account.

Subsection (1) applies to a corporation for a year of assessment only if—

An election under subsection (7)(b), once made, is irrevocable.

If subsection (1) does not apply to a corporation for a year of assessment (cessation year) while it did for the previous year of assessment—

In this section—

For the purposes of section 14ZD(4)(b), a corporation satisfies the safe harbour rule for a year of assessment (subject year) if—

A corporation falls within the 1-year safe harbour if, for the subject year—

A corporation falls within the multiple-year safe harbour if, for the specified years—

In this section, a reference to the specified years for a corporation is a reference to—

The SAP percentage of a corporation for a year of assessment is calculated in accordance with the following formula—

The SAA percentage of a corporation for a year of assessment is calculated in accordance with the following formula—

For the purposes of subsection (6), in computing the aggregate value of the ship agency assets of a corporation, if a ship agency asset is used partly to carry out a qualifying ship agency activity and partly for another purpose, only the part of the value of the asset that is proportionate to the extent to which the asset is used to carry out a qualifying ship agency activity is to be taken into account.

A reference to the average SAP percentage of a corporation for the specified years is a reference to the percentage arrived at by—

A reference to the average SAA percentage of a corporation for the specified years is a reference to the percentage arrived at by—

In this section—

For the purposes of section 14ZD(4)(c), the Commissioner may, on application by a corporation, determine that the corporation is a qualifying ship agent for a year of assessment.

A corporation may apply for the Commissioner’s determination under subsection (1) only if, for the year of assessment, the corporation satisfies neither of the following—

The Commissioner may make a determination under subsection (1) only if the Commissioner is of the opinion that the corporation would, in its ordinary course of business, have satisfied the conditions specified in section 14ZD(5), or the safe harbour rule under section 14ZE, for the year of assessment.

For the purposes of section 14ZD(7)(a)(ii), an activity producing the assessable profits of a corporation that fall within section 14ZD(1) (as read together with section 14ZD(2)) for a year of assessment is not considered to be carried out in Hong Kong by the corporation, or arranged by the corporation to be carried out in Hong Kong, during the basis period for the year of assessment unless the prescribed requirements are met.

To avoid doubt, the fact that the prescribed requirements are not met for the purposes of subsection (1) does not imply that the assessable profits mentioned in that subsection do not arise in, or are not derived from, Hong Kong.

In this section—

Any loss sustained by a corporation from a qualifying ship agency activity in a year of assessment is, to the extent specified in subsection (2), not available for set off against any of its assessable profits for the year of assessment or any subsequent year of assessment if the activity is carried out—

The extent specified for subsection (1) is the extent to which the activity mentioned in paragraph (b) of that subsection generates income—

If section 14ZD(1)(a) applies to a corporation for a year of assessment for which the rate of profits tax specified in Schedule 8C is 0%, any loss sustained by the corporation from a qualifying ship agency activity—

in the year of assessment is not available for set off against any of its assessable profits for the year of assessment or any subsequent year of assessment.

Subsection (2) applies if—

Any profits that, but for the conditions referred to in subsection (1)(a), would have accrued to the corporation or the person and, by reason of those conditions, have not so accrued, are to be included in the profits of the corporation or the person and taxed in accordance with this Part.

If—

section 14ZD(1) does not apply in relation to any assessable profits accrued to the corporation during a basis period relevant to the arrangement.

For the purposes of this section, the basis period of a year of assessment is relevant to an arrangement if, in the Commissioner’s opinion, the arrangement has effect during that basis period.

In this Subdivision—

Also, Part 1 of Schedule 17FB contains interpretation provisions that apply to this Subdivision in accordance with their terms.

A ship management activity carried out by a corporation is a qualifying ship management activity if the activity is carried out in the ordinary course of the corporation’s business carried on in Hong Kong.

A note located in the text of this Subdivision is provided for information only and has no legislative effect.

For the purposes of this Part and subject to subsections (7) and (9), the assessable profits of a corporation that is a qualifying ship manager for a year of assessment are chargeable to tax under this Part at—

In ascertaining the assessable profits of a corporation for the purposes of subsection (1), there are to be excluded, to the extent specified in subsection (3), any profits derived by the corporation from its qualifying ship management activity that is carried out—

The extent specified for subsection (2) is the extent to which the activity mentioned in paragraph (b) of that subsection generates income—

A corporation is a qualifying ship manager for a year of assessment if, for the year of assessment—

The conditions specified for subsection (4)(a) are—

during the basis period for the year of assessment.

For the purposes of subsection (5)(b), in determining whether a corporation has carried out any activity other than a qualifying ship management activity, only activities that generate income to the corporation are to be taken into account.

Subsection (1) applies to a corporation for a year of assessment only if—

An election under subsection (7)(b), once made, is irrevocable.

If subsection (1) does not apply to a corporation for a year of assessment (cessation year) while it did for the previous year of assessment—

In this section—

For the purposes of section 14ZM(4)(b), a corporation satisfies the safe harbour rule for a year of assessment (subject year) if—

A corporation falls within the 1-year safe harbour if, for the subject year—

A corporation falls within the multiple-year safe harbour if, for the specified years—

In this section, a reference to the specified years for a corporation is a reference to—

The SMP percentage of a corporation for a year of assessment is calculated in accordance with the following formula—

The SMA percentage of a corporation for a year of assessment is calculated in accordance with the following formula—

For the purposes of subsection (6), in computing the aggregate value of the ship management assets of a corporation, if a ship management asset is used partly to carry out a qualifying ship management activity and partly for another purpose, only the part of the value of the asset that is proportionate to the extent to which the asset is used to carry out a qualifying ship management activity is to be taken into account.

A reference to the average SMP percentage of a corporation for the specified years is a reference to the percentage arrived at by—

A reference to the average SMA percentage of a corporation for the specified years is a reference to the percentage arrived at by—

In this section—

For the purposes of section 14ZM(4)(c), the Commissioner may, on application by a corporation, determine that the corporation is a qualifying ship manager for a year of assessment.

A corporation may apply for the Commissioner’s determination under subsection (1) only if, for the year of assessment, the corporation satisfies neither of the following—

The Commissioner may make a determination under subsection (1) only if the Commissioner is of the opinion that the corporation would, in its ordinary course of business, have satisfied the conditions specified in section 14ZM(5), or the safe harbour rule under section 14ZN, for the year of assessment.

For the purposes of section 14ZM(7)(a)(ii), an activity producing the assessable profits of a corporation that fall within section 14ZM(1) (as read together with section 14ZM(2)) for a year of assessment is not considered to be carried out in Hong Kong by the corporation, or arranged by the corporation to be carried out in Hong Kong, during the basis period for the year of assessment unless the prescribed requirements are met.

To avoid doubt, the fact that the prescribed requirements are not met for the purposes of subsection (1) does not imply that the assessable profits mentioned in that subsection do not arise in, or are not derived from, Hong Kong.

In this section—

Any loss sustained by a corporation from a qualifying ship management activity in a year of assessment is, to the extent specified in subsection (2), not available for set off against any of its assessable profits for the year of assessment or any subsequent year of assessment if the activity is carried out—

The extent specified for subsection (1) is the extent to which the activity mentioned in paragraph (b) of that subsection generates income—

If section 14ZM(1)(a) applies to a corporation for a year of assessment for which the rate of profits tax specified in Schedule 8C is 0%, any loss sustained by the corporation from a qualifying ship management activity—

in the year of assessment is not available for set off against any of its assessable profits for the year of assessment or any subsequent year of assessment.

Subsection (2) applies if—

Any profits that, but for the conditions referred to in subsection (1)(a), would have accrued to the corporation or the person and, by reason of those conditions, have not so accrued, are to be included in the profits of the corporation or the person and taxed in accordance with this Part.

If—

section 14ZM(1) does not apply in relation to any assessable profits accrued to the corporation during a basis period relevant to the arrangement.

For the purposes of this section, the basis period of a year of assessment is relevant to an arrangement if, in the Commissioner’s opinion, the arrangement has effect during that basis period.

In this Subdivision—

Also, Part 1 of Schedule 17FB contains interpretation provisions that apply to this Subdivision in accordance with their terms.

A ship broking activity carried out by a corporation is a qualifying ship broking activity if the activity is carried out in the ordinary course of the corporation’s business carried on in Hong Kong.

A note located in the text of this Subdivision is provided for information only and has no legislative effect.

For the purposes of this Part and subject to subsections (7) and (9), the assessable profits of a corporation that is a qualifying ship broker for a year of assessment are chargeable to tax under this Part at—

In ascertaining the assessable profits of a corporation for the purposes of subsection (1), there are to be excluded, to the extent specified in subsection (3), any profits derived by the corporation from its qualifying ship broking activity that is carried out—

The extent specified for subsection (2) is the extent to which the activity mentioned in paragraph (b) of that subsection generates income—

A corporation is a qualifying ship broker for a year of assessment if, for the year of assessment—

The conditions specified for subsection (4)(a) are—

during the basis period for the year of assessment.

For the purposes of subsection (5)(b), in determining whether a corporation has carried out any activity other than a qualifying ship broking activity, only activities that generate income to the corporation are to be taken into account.

Subsection (1) applies to a corporation for a year of assessment only if—

An election under subsection (7)(b), once made, is irrevocable.

If subsection (1) does not apply to a corporation for a year of assessment (cessation year) while it did for the previous year of assessment—

In this section—

For the purposes of section 14ZV(4)(b), a corporation satisfies the safe harbour rule for a year of assessment (subject year) if—

A corporation falls within the 1-year safe harbour if, for the subject year—

A corporation falls within the multiple-year safe harbour if, for the specified years—

In this section, a reference to the specified years for a corporation is a reference to—

The SBP percentage of a corporation for a year of assessment is calculated in accordance with the following formula—