税务条例的有关规定.DOCVIP

Case No. D3/13 Profits tax – commission – purchase for self consumption – sections 2, 14(1), 16(1), 17(1) and 68(4) of the Inland Revenue Ordinance (‘the Ordinance’) – DPIN No 15. [Decision in Chinese] Panel: Albert T da Rosa Jr (chairman), Susanna W Y Lee and Timothy Shen Ka Yip. Date of hearing: 15 January 2013. Date of decision: 23 April 2013. Company C is in the business of selling ginseng powder by way of multi-level marketing. The taxpayer alleged that the ginseng powder could improve his health as well as those of his family members. He became an independent distributor of Company C in order to obtain more favourable discount. He asserted that his purchase from Company C was only for self consumption and that he did not carry on any trade or business. The amount of discount received was not trading receipt. If he were carrying on any trade or business, the cost of the 8 bottles of ginseng powder he gave to his father-in-law should be deducted from his assessable profits. Held: 1. It was only because of his business of being an independent distributor that the taxpayer received the amount which is in the nature of a commission. The amount was trading receipt of the taxpayer’s business of being an independent distributor and in accordance with section 14(1) of the Ordinance it is chargeable to profits tax. 2. The taxpayer is, on the one hand an independent distributor of Company C and on the other, a consumer. He, through his independent distributor’s account, purchased products for his family and his own use. It was his private arrangement whether he purchased for his own use or as a gift and therefore the expenses of such purchases are not deductible under the provisions of sections 16(1) and 17(1) of the Ordinance. The taxpayer did not adduce any evidence to establish that the 8 bottles of ginseng powder given to his father-in-law was not a gift but was for the purpose of promoting the product of Company C in order to produce the commission earne