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HONG KONG SHUE YAN UNIVERSITY
BUS 405 TAX PLANNING

Homework 2

Question 1

Mr. Herbert Lee, a Singaporean, is being offered a job from a U.S. based company, Gateway Corporation. According to the proposed employment contract, Mr. Lee will have to meet the management team in the US and sign the contract there. His job is to oversee and supervise the operations of the Corporation’s various affiliated companies in the Far East region, including Hong Kong. He is expected to travel extensively in the region but for convenience purposes, he will be sent to and be accommodated in the office of Gateroom Ltd, a wholly owned subsidiary of Gateway Corporation in Hong Kong. No contract is to be signed between Mr. Lee and Gateroom Ltd but it is agreed that Gateroom Ltd will provide all administrative support to Mr. Lee especially when he stayed in Hong Kong to perform his duties. Gateroom Ltd will charge back its administrative costs (including travelling and telephone costs) to the US parent in respect of its support given. Mr. Lee is required to report directly to the US parent in respect of the operation performance of respective companies in the region. His salary will however be paid in Singapore dollars into his bank account in Singapore.

Mr. Lee understands that Hong Kong taxation system is limited by territorial ambit and he is concerned about the Hong Kong tax implication of his employment income under the new offer. He approached you for advice with his expected travelling schedule as below:

15.5.2011Hong KongArrived at Hong Kong and reported to Gateroom Ltd

5.6.2011 -
27.6.2011SingaporeTo attend meetings and seminars

1.8.2011 -
30.8.2011ChinaTo attend meetings and conferences

1.11.2011 -
18.11.2011IndonesiaTo attend meetings

30.12.2011 -
23.1.2012ThailandTo attend meetings and vacation leave (leave days of 10 days)

Required:

Explain briefly the Hong Kong tax system in relation to...
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