Hong Kong Case Law: Decisions & Judgments

Topic

Interest deduction

Legal area

Court

19 May 2008

COMMISSIONER OF INLAND REVENUE v. HIT FINANCE LTD

Citation

COMMISSIONER OF INLAND REVENUE v. HIT FINANCE LTD
Court

Court of Final Appeal
Case number

FACV8/2007

The Court held that interest paid by HITL on amounts exceeding the US$587,000,000 actually borrowed by the group must be disallowed, and therefore the assessments on HITL as increased by the Board of Review under s.68(8)(a) IRO are to be confirmed; subsequent borrowings by other group companies do not permit HITL to claim the same interest deductions.
19 May 2008

COMMISSIONER OF INLAND REVENUE v. HONGKONG INTERNATIONAL TERMINALS LTD

Citation

COMMISSIONER OF INLAND REVENUE v. HONGKONG INTERNATIONAL TERMINALS LTD
Court

Court of Final Appeal
Case number

FACV9/2007

The Court allowed the Commissioner s appeal against HITL and confirmed the Board of Review s increased assessments because the deductions for interest attributable to sums in excess of the US$587 million actually borrowed were not allowable; subsequent borrowings by other group companies do not entitle HITL to deduct interest on the same borrowings, and the Board s increased assessments must be confirmed under s.68(8)(a).
19 May 2008

COMMISSIONER OF INLAND REVENUE v. HIT FINANCE LTD

Citation

COMMISSIONER OF INLAND REVENUE v. HIT FINANCE LTD
Court

Court of Final Appeal
Case number

FACV16/2007

The Court held that interest claimed by HIT Finance on sums in excess of the US$587 million actually borrowed by the group must be disallowed, and accordingly confirmed the assessments on HIT Finance as increased by the Board of Review under s.68(8)(a); subsequent borrowings by other group companies did not entitle HIT Finance to duplicate interest deductions.
4 Dec 2007

COMMISSIONER OF INLAND REVENUE v. HIT FINANCE LTD

Citation

COMMISSIONER OF INLAND REVENUE v. HIT FINANCE LTD
Court

Court of Final Appeal
Case number

FACV8/2007

Although the transactions were real, the introduction of Strategic and the circular borrowing were found to have the sole or predominant purpose of securing a tax benefit by enabling larger interest deductions; under s.61A the Commissioner was entitled to counteract that benefit by disallowing interest deductions in excess of the net proceeds actually received by the group, so the assessment on Hongkong International Terminals Limited was confirmed while the appeal against Hit Finance Limited was dismissed.
4 Dec 2007

COMMISSIONER OF INLAND REVENUE v. HONGKONG INTERNATIONAL TERMINALS LTD

Citation

COMMISSIONER OF INLAND REVENUE v. HONGKONG INTERNATIONAL TERMINALS LTD
Court

Court of Final Appeal
Case number

FACV9/2007

The Court held that although the transactions were genuine and satisfied ss 16 and 17, the introduction of the offshore vehicle (Strategic) and the circular borrowing had the effect of conferring a tax benefit (allowing larger interest deductions) and were entered into solely or predominantly to obtain that benefit; accordingly s.61A empowered the Commissioner to disallow interest deductions in respect of the excess borrowing for Hongkong International Terminals Ltd, but not to disallow deductions for Hit Finance Ltd beyond counteracting the tax benefit.
4 Dec 2007

COMMISSIONER OF INLAND REVENUE v. HONGKONG INTERNATIONAL TERMINALS LTD

Citation

COMMISSIONER OF INLAND REVENUE v. HONGKONG INTERNATIONAL TERMINALS LTD
Court

Court of Final Appeal
Case number

FACV17/2007

The Court held that the introduction of Strategic and the circular borrowing were introduced for the sole or predominant purpose of obtaining a tax benefit by enabling larger interest deductions; accordingly the Commissioner was entitled under s.61A to counteract that tax benefit by disallowing interest deductions of HITL in excess of the net loan proceeds actually received by the group; the assessments on HITL were confirmed and the appeal against Finance was dismissed.
15 Nov 2001

GABY ANDERSON v. WUI YIP COMPANY LTD & OTHERS

Citation

GABY ANDERSON v. WUI YIP COMPANY LTD & OTHERS
Court

Court of First Instance
Case number

HCPI244/1998

The assessed judgment of $783,355.90 was to be reduced by the interim payment of $200,000.00 and by $14,000.00 representing interest, resulting in an amended judgment of $569,355.90.

Hong Kong Case Law

COMMISSIONER OF INLAND REVENUE v. HIT FINANCE LTD

COMMISSIONER OF INLAND REVENUE v. HONGKONG INTERNATIONAL TERMINALS LTD

COMMISSIONER OF INLAND REVENUE v. HIT FINANCE LTD

COMMISSIONER OF INLAND REVENUE v. HIT FINANCE LTD

COMMISSIONER OF INLAND REVENUE v. HONGKONG INTERNATIONAL TERMINALS LTD

COMMISSIONER OF INLAND REVENUE v. HONGKONG INTERNATIONAL TERMINALS LTD

GABY ANDERSON v. WUI YIP COMPANY LTD & OTHERS