Links to Text
Funding Issues
Depreciation Review
Corporate Structuring
Stamp Duty
Funding Issues
One of the key issues facing a business operating in Hong Kong is the deductibility of funding costs. We have developed a process designed to manage the tax risk of interest disallowance and provide constructive solutions. Interest deductibility problems are likely to arise where:
- Business operations/investments have been made outside Hong Kong
- Operations are funded through a mix of retained earnings and debt
- Funding has been raised for share acquisitions
We have developed various potential solutions which include debt push down, structures for allocating interest bearing and non-interest bearing funds and the use of preference shares.
Depreciation Review
Hong Kong has a system of very generous tax depreciation allowances. A depreciation review is a process used to analyse the capital expenditure incurred so as to maximise the allowances and provide robust documentation to support the claim. A tax-optimised cost allocation can give rise to significant tax deferral and cash flow advantages. A depreciation review is applicable to a wide range of infrastructure, property development, hotel and major renovation projects. We have well-developed methodology, research materials and a pro-forma technical report which ensures the process is cost-effective and adds value.
Corporate Structuring
An efficient corporate structure provides flexibility and facilitates the following:
- Segregation of trading assets and capital assets
- Tax efficient fund raising
- Appropriate allocation of costs, including funding costs
- Joint ventures with other parties
- Future disposal of part of an asset
- Mitigation of profits tax and stamp duty
A group review of your existing/proposed corporate structure is an essential part of corporate governance and is particularly relevant to property development, acquisition of new business and investments, inbound and outbound investments.
Stamp Duty
The objective of a stamp duty review is to mitigate the stamp duty costs, either by way of reduction or deferral. Because of the high stamp duty rates applicable to the transfer of Hong Kong property such a review is likely to add greatest value in transactions involving property development, exchange of land, shares acquisition, re-organisation of corporate structures, etc. We have in-house tax lawyers who specialise in stamp duty. We have also developed a variety of techniques which have been implemented and have proven to be effective. |
