On 3 March 2015, the Hong Kong Inland Revenue Department (IRD) issued the following press release announcing that 2013/2014 profits tax returns will be accepted with profits computed using the fair value basis.
Subsequent to the judgment of the Court of Final Appeal in Nice Cheer Investment Limited v CIR, the Department has agreed, as an interim administrative measure while pending review, to accept 2013/14 profits tax returns in which the assessable profits are computed on a fair value basis.
The Department is prepared to extend the interim administrative measure to the filing of 2014/15 profits tax returns while pending completion of review. That is, the Department agrees to accept the 2014/15 returns in which the assessable profits are computed on a fair value basis.
Similarly, the Department agrees to re-compute the 2014/15 assessable profits computed on a fair value basis if the taxpayers subsequently adopts the realization basis. However, any request for re-computation should be made within the time limits laid down in sections 60 or 70A (6 years) of the Inland Revenue Ordinance.
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