Question 1 (20 marks)

The newly appointed CFO of your client, ABC Limited (a trading company incorporated in Hong Kong) just arrived at Hong Kong from the US. He wishes to know about the tax compliance obligations of a company carrying on a business in Hong Kong, and the reporting obligations imposed on the Employer under the Inland Revenue Ordinance (IRO).

Required:

(a) Advise the CFO on the tax obligations of ABC Limited as a taxpayer and as an employer under the IRO. (12 marks)

The CFO recently received the final assessment of the previous year (year of assessment 2018/19) dated 15 October 2020. However, he disagreed with the assessment as the assessor did not allow an interest expense deduction claim submitted by the company, resulting in an increase in assessable profits of ABC Limited.

Required:

(b) Advise in detail on what actions the CFO can take to object to the Inland Revenue Department's assessment under the IRO in particular what conditions he must meet in order to lodge such an objection. (5 marks)

(c) The CFO wonders ABC Limited still has to pay the profits tax that is in dispute if an objection is lodged with the Inland Revenue Department. Advise him what he can do with this tax in dispute. (3 marks) [Total for Q1: 20 marks]