Hong Kong Case Law: Decisions & Judgments

Topic

Apportionment of profits

Legal area

Court

29 Sept 2025

WISE PEARL LTD v. THE COMMISSIONER OF INLAND REVENUE

Citation

[2025] HKCA 596
Court

Court of Appeal
Case number

CAMP34/2024

The application for leave to appeal was dismissed because the proposed grounds did not raise questions of law but were challenges to the Board's factual findings (including sourcing of profits and timing/nature of property interests) which were supported by evidence; statutory and case law principles limit intervention to cases of legal error or perverse/no evidence, none of which were shown.
18 Apr 2011

COMMISSIONER OF INLAND REVENUE v. LI & FUNG (TRADING) LTD

Citation

COMMISSIONER OF INLAND REVENUE v. LI & FUNG (TRADING) LTD
Court

Court of First Instance
Case number

HCIA3/2010

The Board correctly identified that the profit-producing transactions were the sourcing and agency activities performed by overseas local affiliates; those activities occurred outside Hong Kong and thus the disputed profits were sourced offshore and not subject to Hong Kong profits tax. Apportionment was not required on the facts.
15 Jul 2009

COMMISSIONER OF INLAND REVENUE v. DATATRONIC LTD

Citation

COMMISSIONER OF INLAND REVENUE v. DATATRONIC LTD
Court

Court of Appeal
Case number

CACV275/2008

The Court held that the source of taxable profits is determined by the profit‑producing transactions themselves; DSC carried on manufacturing on its own account and sold to the taxpayer, the taxpayer's profit arose from resale in Hong Kong, antecedent mainland activities were incidental, DIPN 21 is a non‑binding concession and could not justify apportionment; accordingly the Board of Review's conclusions that profits were partly sourced in the Mainland and that a 50:50 apportionment applied were wrong and were reversed.
13 Jun 2008

COMMISSIONER OF INLAND REVENUE v. DATATRONIC LTD

Citation

COMMISSIONER OF INLAND REVENUE v. DATATRONIC LTD
Court

Court of First Instance
Case number

HCIA3/2007

On the facts found by the Board, the taxpayer was sufficiently involved in the Mainland manufacturing activities (substance over form) such that part of its profits were manufacturing profits sourced in the Mainland; DIPN 21 applies and an apportionment on the usual 50:50 basis is appropriate; questions of agency and documentary form were irrelevant to the applicability of DIPN 21 in these facts; the Board's decision was correct and is affirmed.
27 Apr 2007

COMMISSIONER OF INLAND REVENUE v. BOARD OF REVIEW (INLAND REVENUE ORDINANCE) AND ANOTHER

Citation

COMMISSIONER OF INLAND REVENUE v. BOARD OF REVIEW (INLAND REVENUE ORDINANCE) AND ANOTHER
Court

Court of Appeal
Case number

CACV57/2006

The Court of Appeal held that a Board 'decision' for the purposes of s69 includes a decision made after remittance by the court and therefore the Board's revised decision following remittal could be the subject of a further case stated; the Board erred in refusing to state a case on questions central to apportionment and source which raised points of law and were not an abuse of process; appeal dismissed and the Board's refusal quashed so the Board must state a case in accordance with the lower court order.
24 Apr 2003

COMMISSIONER OF INLAND REVENUE v. INDOSUEZ W I CARR SECURITIES LTD

Citation

COMMISSIONER OF INLAND REVENUE v. INDOSUEZ W I CARR SECURITIES LTD
Court

Court of First Instance
Case number

HCIA5/2001

It was appropriate to remit the case to the Board of Review for it to consider, in light of its findings, whether to apportion profits derived from commissions earned from overseas clients; the court rejected the taxpayer's submission that remittal would be inappropriate as prejudging the issue.
30 Jan 2002

COMMISSIONER OF INLAND REVENUE v. INDOSUEZ W I CARR SECURITIES LTD.

Citation

COMMISSIONER OF INLAND REVENUE v. INDOSUEZ W I CARR SECURITIES LTD.
Court

Court of First Instance
Case number

HCIA4/2001

The Board erred in law by drawing an inference of agency of the overseas group offices in the absence of adequate basis for that inference (Q1 and Q3 answered yes); for Hong Kong clients the execution of overseas orders by local brokers amounted to acts of the taxpayer performed through its agents (Q2 answered yes in respect of Hong Kong clients); apportionment of profits is legally permissible and appropriate for reconsideration by the Board (Q5 answered in favour of permissibility); the matter is remitted to the Board for reconsideration and appropriate apportionment where applicable.
15 Dec 1988

BANK OF INDIA v. COMMISSIONER OF INLAND REVENUE

Citation

BANK OF INDIA v. COMMISSIONER OF INLAND REVENUE
Court

Court of First Instance
Case number

HCIA4/1988

The court applied the operations test as formulated in the Hong Kong authorities (Sinolink and Hong Kong and Whampoa Dock) and held that the source of the discounting profits was Hong Kong because the decisive operations — contract formation, purchase/discounting, processing, treasury/funding and issuance of instructions — occurred in Hong Kong; routine presentation overseas by correspondent banks did not constitute the operations in substance producing the profit and therefore the Board of Review was correct to treat the profits as arising in or derived from Hong Kong.
16 Jul 1971

THE COMMISSIONER OF INLAND REVENUE v. INTERNATIONAL WOOD PRODUCTS LTD

Citation

THE COMMISSIONER OF INLAND REVENUE v. INTERNATIONAL WOOD PRODUCTS LTD
Court

Court of First Instance
Case number

HCIA2/1971

The Board of Review's factual finding that the operations producing the commissions were carried out outside Hong Kong was supported by the evidence (sub-agents solicited and concluded orders, principals in the Philippines executed contracts and shipped goods, taxpayer merely received commission statements) and is final on a case stated; therefore the commissions did not arise in Hong Kong and the assessment was correctly annulled, and this court will not reappraise facts under s.69 except to correct errors of law.