Advance Ruling Case No. 17

1. The provisions of the Ordinance

This ruling applies in respect of section 18E of the Inland Revenue Ordinance.

2. Background

(a)

Company A, Company B and Company C ("the Applicants") were incorporated in Hong Kong and they commenced business after 1 April 1974.

(b)

The Applicants are companies within the same Group. The holding company of the Applicants is Company D, a company incorporated in Country X.

(c)

In 2003, Company D was acquired by Company F. After the acquisition, Company F became the new ultimate holding company of the Applicants.

(d)

The Applicants make up their accounts to 31 December whereas Company F makes up its accounts to 30 June.

3. The arrangement

(a)

The Applicants will change the accounting date from 31 December to 30 June in the year of assessment 2004/2005.

(b)

The reason put forward by the Applicants for the change of accounting date is to conform to the accounting date of Company F.

4. The ruling

(a)

The Commissioner will adopt the six-month period from 1 January 2004 to 30 June 2004 as the basis period of the Applicants for the year of assessment 2004/2005.

(b)

The assessable profits/adjusted losses of the Applicants for the year of assessment 2003/2004 will not be recomputed as a result of the change of their accounting date from 31 December to 30 June.

5. The period for which the ruling applies

This ruling applies to the Applicants for the years of assessment 2003/2004 and 2004/2005.

6. The material assumptions in respect of a future event or any other matter made by the Commissioner

There are no assumptions made by the Commissioner.

7 . Date of ruling issued

24 August 2004.