On 28 January 2016, the Hong Kong Inland Revenue Department (IRD) issued a press release announcing that 2015/2016 profits tax returns will be accepted with profits computed using the fair value basis.
Profits Tax Return - Fair Value Accounting
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 and 2014/15 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 further to the filing of 2015/16 profits tax returns. That is, the Department agrees to accept the 2015/16 returns in which the assessable profits are computed on a fair value basis.
Similarly, the Department agrees to re-compute the 2015/16 assessable profits computed on a fair value basis if the taxpayers subsequently adopts the realisation basis. However, any request for re-computation should be made within the time limits laid down in sections 60 or 70A of the Inland Revenue Ordinance.
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