Question 3 (20 marks) Ben works as a senior marketing manager for a trading company (HK Ltd) based in Hong Kong. He is often sent by the company to visit its clients in the Southeast Asian countries as well as attend numerous overseas conferences helping the company explore business opportunities. Ben likes skiing very much and spends more than one month in Swiss every year. Ben understands that the tax rules for reporting salaries tax under a Hong Kong sourced employment and a non-Hong Kong sourced employment are different: the tax liabilities will be lower if he has a non-Hong Kong sourced employment. As requested, HK Ltd arranged Ben to enter into a separate offshore employment contract with BVI Ltd, one of the subsidiaries of HK Ltd which has no business transactions since incorporation. All the terms and conditions initially agreed between HK Ltd and Ben would not be changed, i.e. he would carry on his duties exactly the same as before. HK Ltd would bear the salary of Ben under the new employment. In the tax return for the year of assessment 2019/20, Ben reported that his income was from a non-HK employment. He also claimed his personal travel days as business days travelling outside Hong Kong.

Required: (a) Explain the principles to ascertain the source of employment under the Hong Kong tax regime, and advise Ben on the possible tax implications and risks with reference to the Inland Revenue Ordinance. (14 marks)

(b) Discuss the ethicality of Bens behavior based on views from utilitarians, deontologists and virtue ethicists. (6 marks) [Total for Question 3: 20 marks]