### Inland Revenue Ordinance 《稅務條例》

12A. Treatment of losses
(1) Where in any year of assessment the aggregate of the outgoings, expenses and allowances deductible under section 12(1)(a) and (b) from the assessable income of a person exceeds the amount of his assessable income, the amount of the excess shall, subject to subsection (4), be carried forward and set off against his assessable income in subsequent years of assessment.
(2) The aggregate amount set off against a person’s assessable income in subsequent years of assessment shall not exceed the amount of any excess under subsection (1).
(3) Subject to subsection (4), a set off by a person under this section shall first be made against his assessable income for the year of assessment next succeeding the year of assessment in respect of which the excess occurred and, so far as it cannot be so made, against his assessable income for the next year of assessment and so on until the excess has been completely set off.
(4) Where in any year of assessment the net chargeable incomes of the husband and wife are aggregated by reason of an election made under section 10(2), any excess carried forward into that year under this section shall—
(a) be set off primarily against the assessable income of the spouse whose deductions resulted in the excess and then, so far as it cannot be so set off, against the assessable income of the other spouse; and
(b) then, and so far as it cannot be set off in accordance with paragraph (a)—
(i) where no election is made under section 10(2) in respect of the following year of assessment, in accordance with subsection (3); or
(ii) where an election is made under section 10(2) in respect of the following year of assessment, in accordance with paragraph (a),
and so on from year to year until the excess has been completely set off. (Replaced 43 of 1989 s. 5)
(Replaced 7 of 1975 s. 4. Amended 71 of 1983 s. 9)

### Inland Revenue Ordinance 《稅務條例》

12B. Ascertainment of net chargeable income
(1) The net chargeable income of a person for any year of assessment shall, subject to subsection (2), be such amount as is arrived at after deducting from his net assessable income—
(a) such deductions as are under Part 4A allowable to that person; and (Replaced 31 of 1998 s. 5)
(b) such allowances as are under Part 5 permitted for that person. (Amended 43 of 1989 s. 6)
(2) In the case of a person chargeable to salaries tax under section 10(3), that person and his or her spouse shall have but one net chargeable income, and it shall be the amount arrived at after deducting from the aggregate of their net assessable incomes—
(a) such deductions as are under Part 4A allowable to them; and (Replaced 31 of 1998 s. 5)
(b) such allowances as are under Part 5 permitted in their case. (Replaced 43 of 1989 s. 6) 
(3) (Repealed 43 of 1989 s. 6) (Replaced 71 of 1983 s. 10. Amended E.R. 1 of 2012)

### Inland Revenue Ordinance 《稅務條例》

13. Calculation of salaries tax
(1) Subject to subsection (2), salaries tax shall be charged at the rates specified in Schedule 2 on the net chargeable income of a person for each year of assessment ascertained in accordance with this Part. (Amended L.N. 350 of 1990)
(2) The amount of salaries tax so charged shall not exceed the amount which would have been chargeable had the standard rate been charged on the whole of—
(a) the net assessable income as reduced by such deductions as are under Part 4A allowable to the person; or
(b) in the case of a spouse chargeable to salaries tax under section 10(3), the aggregate amount of his or her net assessable income and that of his or her spouse as reduced by such deductions as are under Part 4A allowable to them. (Amended 31 of 1998 s. 7)
(3) Notwithstanding subsections (1) and (2), the amount of salaries tax charged under this section for the year of assessment commencing on 1 April 2006 shall be reduced by an amount equivalent to—
(a) 50% of the amount of the tax as computed under subsection (1) read together with subsection (2); or
(b) $15,000,
whichever is the less. (Added 10 of 2007 s. 3)
(Replaced 43 of 1989 s. 8. Amended E.R. 1 of 2012)

13A. Part 8AA applies
Part 8AA applies for the purposes of calculation of salaries tax.
(Added 27 of 2018 s. 12)

### Inland Revenue Ordinance 《稅務條例》

14AA. Interpretation
(1) In this section and sections 14AAB and 14AAC—

entity (實體) means—
(a) a natural person;
(b) a body of persons; or
(c) a legal arrangement, including—
(i) a corporation;
(ii) a partnership; and
(iii) a trust;

sole proprietorship business (獨資經營業務), in relation to a natural person, means a trade, profession or business carried on by the person as a sole proprietor.
(2) For the purposes of section 14AAB(1)(c), if a natural person carries on more than one sole proprietorship business, the person is taken to be a separate entity in relation to each sole proprietorship business.
(Added 13 of 2018 s. 4)

14AAB. Meaning of connected entity

14AAC. Charge of profits tax for connected entities
(1) This section applies to an entity in relation to any year of assessment commencing on or after 1 April 2018 (specified year of assessment

### Inland Revenue Ordinance 《稅務條例》

14E. Qualifying corporate treasury centre: safe harbour rule
(1) For the purposes of section 14D(2)(b), a corporation satisfies the safe harbour rule for a year of assessment (subject year

### Inland Revenue Ordinance 《稅務條例》

14F. Qualifying corporate treasury centre: Commissioner’s determination
(1) 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.
(2) A corporation may apply for the Commissioner’s determination under subsection (1) only if—
(a) it is not a financial institution or LAC banking entity; and (Amended 4 of 2019 s. 5)
(b) for the year of assessment, it satisfies neither of the following—
(i) the conditions specified in section 14D(3);
(ii) the safe harbour rule under section 14E.
(3) 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.
(Added 12 of 2016 s. 3)