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Profits Tax Return - Fair Value Accounting

Subsequent to the judgment of the Court of Final Appeal in Nice Cheer Investment Limited v CIR, the Department has agreed, as an interim administrative measure while pending review, to accept 2013/14, 2014/15 and 2015/16 profits tax returns in which the assessable profits are computed on a fair value basis.

The Department is prepared to extend the interim administrative measure further to the filing of 2016/17 profits tax returns. That is, the Department agrees to accept the 2016/17 returns in which the assessable profits are computed on a fair value basis.

Similarly, the Department agrees to re-compute the 2016/17 assessable profits computed on a fair value basis if the taxpayers subsequently adopts the realisation basis. However, any request for re-computation should be made within the time limits laid down in sections 60 or 70A of the Inland Revenue Ordinance.