We want investors and the international business community to know that Hong Kong intends to continue to offer the most attractive tax environment and to remain the best place in the region for them to carry on profitable business. Our profits tax regime is simple and this offers certainty to taxpayers. To enhance certainty as to the application of the territorial source principle to individual cases, our Inland Revenue Department will, from 1 April 1998, provide an advance ruling service for the business community on source of profits. Businessmen will be able to learn in advance whether or not the profits to be derived from a proposed venture would be subject to Hong Kong profits tax. Tax deductions 11.
All expenses incurred in the production of assessable profits are fully deductible.
These include employees' remuneration, expenditure on material inputs for production, other operating expenses like interest payments, rents paid on business premises, bad debts, trade mark and patent registration fees, and expenditure on scientific research or training. In respect of scientific research, expenditure of a capital nature apart from that on land or buildings is also allowed for tax deduction purposes. The deduction also applies to payments to approved research institutes for conducting scientific research. These deductions are clearly set out in our tax legislation. They apply uniformly to all businesses.