Case background:

Quinn Business Worldwide plc$.$ was a European company incorporated in the United

Kingdom in $2017.$ It was the ultimate holding company of Quinn Group $("$the Group"$),$

which has its principal business in cattle farming and steak processing. The Group

established business operations globally in many jurisdictions, and its board of

directors is based in the Netherlands.

Quinn Poisson SA $($QPSA$")$ is a wholly owned subsidiary of Quinn Business Worldwide

plc$.$ QPSA has been operating in France in specifying the product requirements of the

companies within the Group.

The Group has started farming cattle in Asian countries. In $2020,$ Quinn Business $($HK$)$

Co$.$ Ltd$.("$QBHK$")$ was formed and incorporated in Hong Kong to manage and expand

the Group's supplier base in Asia.

Business arrangement under the Group:

In the year $2021,$ QBHK entered into a service agreement $("$the Agreement"$)$ with QPSA.

Pursuant to the Agreement, QBHK would receive service fees from QPSA for providing

to QPSA sourcing, purchase assistance, and other services as concluded in the

Agreement.

QBHK employed local staff in Asian countries like Indonesia and Philippines, where

suppliers are located to perform all the services under the Agreement.

QBHK did not have any office, did not recruit and employ any employee, did not appoint

any agent nor operate any bank account in Hong Kong. The reason was that none of the

supplier was in Hong Kong. For the year $2022,$ QBHK received $$850,000$ from QPSA as

fees for services provided to QPSA.

Required:

a$)$ Explain the legal principles established in tax cases in determining the source of

profits in Hong Kong profits tax.

$(5$ marks$)$

b$)$ Discuss the profits tax source rules that are applicable to the case above. $(5$ marks$)$

c$)$ Evaluate whether Quinn Business $($HK$)$ Co$.$ Ltd$.$ receipt of $$850,000$ was liable to

Hong Kong profits tax.

$(10$ marks$)$ Quinn Business Worldwide plc$.$ was a European company incorporated in the United

Kingdom in $2017.$ It was the ultimate holding company of Quinn Group $($the Group$),$

which has its principal business in cattle farming and steak processing. The Group

established business operations globally in many jurisdictions, and its board of

directors is based in the Netherlands.

Quinn Poisson SA $($QPSA$)$ is a wholly owned subsidiary of Quinn Business Worldwide

plc$.$ QPSA has been operating in France in specifying the product requirements of the

companies within the Group.

The Group has started farming cattle in Asian countries. In $2020,$ Quinn Business $($HK$)$

Co$.$ Ltd$.($QBHK$)$ was formed and incorporated in Hong Kong to manage and expand

the Group$$s supplier base in Asia.

Business arrangement under the Group:

In the year $2021,$ QBHK entered into a service agreement $($the Agreement$)$ with QPSA.

Pursuant to the Agreement, QBHK would receive service fees from QPSA for providing

to QPSA sourcing, purchase assistance, and other services as concluded in the

Agreement.

QBHK employed local staff in Asian countries like Indonesia and Philippines, where

suppliers are located to perform all the services under the Agreement.

QBHK did not have any office, did not recruit and employ any employee, did not appoint

any agent nor operate any bank account in Hong Kong. The reason was that none of the

supplier was in Hong Kong. For the year $2022,$ QBHK received $$850,000$ from QPSA as

fees for services provided to QPSA.

Required:

a$)$ Explain the legal principles established in tax cases in determining the source of

profits in Hong Kong profits tax. $(5$ marks$)$

b$)$ Discuss the profits tax source rules that are applicable to the case above. $(5$ marks$)$

c$)$ Evaluate whether Quinn Business $($HK$)$ Co$.$ Ltd$.$ receipt of $$850,000$ was liable to

Hong Kong profits tax. $(10$ marks$)5$