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loopholes as well as discouraging tax-rate competition among nations.
activities and assets in low-tax jurisdictions,” suggests Howard Badger,
On the other hand, governments are expected in times of austerity
of British crown dependencies and overseas territories.
agreement with the British government in anticipation of the OECD
to sign, while political infighting erupted in the Cayman Islands,
application, acceptance and practice, create a level playing field for all
jurisdictions in the areas of transparency and exchange of information
for tax purposes.”
Other tax-efficient jurisdictions are more sanguine, such as
proud of its reputation as a well regulated, transparent and cooperative
industry, tells A Plus.“Webelievethattrulyaggressivestructures
However, tax lawyers point out that more Chinese corporate
TWO SIDES OF THE TAX COIN
there will be more disputes with the Inland Revenue Department
arising from transfer-pricing issues,” Kwan adds.
In advising clients, tax accountants should stick to clear rules.
“Neither tax evasion nor very aggressive tax avoidance schemes
that violate the law shall be considered,” says Dicky To, a tax ser-
vices partner at RSM Nelson Wheeler in Hong Kong, reflecting the
attitude of many Hong Kong accounting firms.
To says basic assistance to clients would include the following
• Provide a global tax plan aligned with business objectives
• Manage the overall tax burden from operations and transactions
• Mobilize necessary cash to meet the company ’s needs
• Consider opportunities presented by low-tax jurisdictions
• Ensure proper documentation and regular review
The international debate over tax minimization raises many
ethical questions about the propriety of aggressive tax avoidance
schemes. In Hong Kong, while tax practice guidelines are clear, the
ethics of tax advice remain open to interpretation.
“ There are no specific rules or standards on tax avoidance other
than the normal code of ethics applicable to Institute members,”
says Kwan. To suggests that the Institute could issue more guidance
in the area of tax avoidance that follows international practice.
Hong Kong, says tax experts, will have no choice but to conform
to international regulations, and has already amended aspects of its
tax legislation to follow the OECD-recommended standards, such as
enhancing information sharing and transparency requirements.
“Hong Kong is joining the international tax community and this
area is evolving. We have a lot of challenges in those areas,” says Chu
Yam-yuen, the outgoing commissioner of inland revenue and an In-
stitute member. “Hong Kong is being pressured by all the big players,
such as the OECD countries.”
Whatever the outcome, some accountants say that such a bur-
den exerted by legislative pressure can be leveraged by accounting
firms if they are dynamic enough: “Challenges provide opportuni-
ties,” says Ho at EY.
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