Jul 2009, Issue 9
Court of Final Appeal judgment on Ngai Lik Electronics Co Ltd v Commissioner of Inland Revenue - Pyrrhic victory for the taxpayer in an anti-avoidance case? The Court of Final Appeal ("CFA") handed down its judgment on 24 July 2009 on Ngai Lik Electronics Co Ltd v CIR, an anti-avoidance case involving the application of section 61A of the Inland Revenue Ordinance ("IRO"). Experiencing its first setback after a few victories in the anti-avoidance cases brought to the court in the past two years, the Commissioner of Inland Revenue ("CIR") lost in this case as the CFA unanimously allowed the taxpayer's appeal.
This news flash highlights the relevant facts of the case, summarises the key findings of the CFA and discusses some noteworthy points arising from the CFA's judgment from the general Hong Kong profits tax perspective. Besides being an anti-avoidance case, this case also has potentially important transfer pricing implications. (For our more specific comments on the case from the transfer pricing perspective, please refer to our Pricing Knowledge Network Alert China / Hong Kong entitled "Key Hong Kong Court of Final Appeal decision in transfer pricing - major implications" issued on 27 July 2009).
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