Stella is the managing director of Fashion Design Ltd. (“FADES”), a U.K. company which markets designer...

Stella is the managing director of Fashion Design Ltd. (“FADES”), a U.K. company which markets designer clothing obtained from Paris and London. She plans to expand the company’s activities into Hong Kong. Specifically, from a Hong Kong tax perspective, she wants to know whether it is preferable to structure the proposed marketing operations in Hong Kong through a branch or a Hong Kong subsidiary of that company.

You are required to write to Stella giving advice on the choice of a branch or a subsidiary in Hong Kong with reference to the following perspectives:

Basis for ascertaining profits tax position of a branch versus a subsidiary (application of section 14, computation of assessable profits and tax payable, etc.)
Withholding tax on repatriation of profits and/or distribution o dividend
Home country tax deductions for losses incurred in Hong Kong (if any),
Deferral of home country tax, and
Withholding tax in Hong Kong generally

Expert Solution

ekkarill92 answered 1 year ago

Electrics Ltd is a Sydney-based public company which produces electronic equipment. Popper is the managing director...

Electrics Ltd is a Sydney-based public company which produces electronic equipment. Popper is the managing director and the other directors are Jones and Brown. Popper, through his holding of proxies for several institutions, is in a position to control 51% of the shares in Electrics. Popper's daughter wishes to sell a large block of land she owns in Newcastle as she is in urgent need of cash. A proposal that Electrics acquire the land is put to the board by...

Florentia (F) is the managing director of XO Pty Ltd, a profitable company that runs a...

Florentia (F) is the managing director of XO Pty Ltd, a profitable company that runs a dance school (mainly ballroom dancing style) and that specialises in buying and selling dance clothes for women - mainly between the ages of 45-65 years. XO has a board of directors that includes 5 majority shareholders and F chairs the monthly meetings. Recently, F was having lunch with a friend (Luis) who has no connection whatsoever with XO although F would like him to...

Mandalay Ltd. is a company that manufactures fishing equipment and is owned by Managing Director, Joseph...

Mandalay Ltd. is a company that manufactures fishing equipment and is owned by Managing Director, Joseph Cooper. It began trading two years ago, and has seen sales and profit grow at a good rate over the past 12 months. Due to this recent growth, Mandalay Ltd is planning a programme of expansion and as part of this is looking to recruit to its existing Finance department. Presently, the company employs one accountant who has overseen all areas of work but...

Jim is the owner and managing director of Colours Ltd, a company selling eco-friendly paints in...

Jim is the owner and managing director of Colours Ltd, a company selling eco-friendly paints in Ireland. The company has ten stores around the country and is the dominant player in its marketplace. Bulldog Paints is an AIM listed UK company. It sells eco-friendly and premium paints, owning 120 stores and operating mainly in the competitive UK market. It has recentlyundertaken a policy of international expansion. Bulldog Paints has recently suggested merging the two companies. Under the terms of the...

Background Hetta Carbury is the Managing Director of Melmotte Ltd (‘Melmotte’), a small private limited company,...

Background Hetta Carbury is the Managing Director of Melmotte Ltd (‘Melmotte’), a small private limited company, who is seeking someone to invest in her business. Melmotte has been trading for more than 10 years manufacturing and selling its own-branded perfumes, lotions and candles to the public in its 15 retail stores and to other larger retail companies. Revenue and profits have been steady over the last 10 years up to the end of 2018. In July 2015 the company appointed...

Kent Morgan is the Managing Director of Hot Pies Ltd, a producer of meat pies and...

Kent Morgan is the Managing Director of Hot Pies Ltd, a producer of meat pies and sausage rolls. Kent has recently purchased a delivery van to distribute the pies and sausage rolls to bakeries in Melbourne. You are the newly appointed accountant of Hot Pies Ltd. Kent emails you with the following information: ‘The company purchased the delivery van on 1 August 20x6 at a cost of $55,000 (GST inclusive). Our first delivery using the van occurred on 1 September...

Explain this constraints: Smart Pharmacy managing director does not support cloud-based solution. What will network designer...

Explain this constraints: Smart Pharmacy managing director does not support cloud-based solution. What will network designer would do? Network design?

Fashion design Company Ltd. sells clothing. The store sells dresses, skirts and blouses. Financial Statement information...

Fashion design Company Ltd. sells clothing. The store sells dresses, skirts and blouses. Financial Statement information for the clothing is as follows – Dresses Skirts Blouses Sales Revenue 300,000 250,000 600,000 Variable costs 170,000 200,000 300,000 Contribution Margin 130,000 50,000 300,000 Fixed costs 80,000 60,000 120,000 Net Income 50,000 (10,000) 180,000 Unavoidable fixed costs of $150,000 were allocated to the garments based on their respective sales revenues....

Jimmy is the owner of VRS Pty Ltd. Until recently, Jimmy was also the managing director,...

Jimmy is the owner of VRS Pty Ltd. Until recently, Jimmy was also the managing director, but he has decided to employ a manager to take over the daily operations of VRS as he transitions to retirement. The new manager, Beryl, agreed to a performance based contract which says that Beryl will be paid a bonus of $200,000 should the profits exceed a target of $2 million. The contract also says that Beryl must prepare financial statements and have them...

Magi Chen is the managing director of Sun Construction Pty Ltd, a family owned business that...

Magi Chen is the managing director of Sun Construction Pty Ltd, a family owned business that provides construction services. As Magi is interested in purchasing some new constructionequipment’s for her business, she has approached her local bank for finance. The bank has asked that Magi provide an audited financial statement to assist them in considering her loan application. Magi has approached your audit firm for this service and you have been allocated the task of auditing Sun Construction for the...

Question