Hong Kong Court of Appeal reaffirms the source rule for commission income

May 2012

Overview

The Hong Kong Court of Appeal, upheld the lower court's holding in Li & Fung. This confirms the Board of Review's decision that the taxpayer's commission income derived from sourcing goods from overseas suppliers on its customers' behalf was offshore and not subject to Hong Kong profits tax. Taxpayers with current or planned operations in the Asia Pacific region may wish to compare the taxpayer's facts to their own.

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