D from 1 January 2007 to 31 March 2007 will be allowed as a credit against its Hong Kong tax payable, see paragraph 9 above.
Section 50(4) of the Ordinance provides that the total tax credit to be
allowed to a Hong Kong resident for a year of assessment in respect of foreign tax paid shall not exceed the total tax payable in Hong Kong for that year of assessment. Therefore, if a Hong Kong resident suffers a loss in a year of assessment and does not pay any Hong Kong tax (i.e. tax credit allowed is
zero), the tax paid by him in the Mainland will not be allowed as a credit.
Under section 50(5), the amount of tax paid in the Mainland is
included in computing profits or income subject to tax in Hong Kong. However, due to the differences in tax rates between the Mainland and Hong Kong, the tax paid in the Mainland may exceed the amount of the credit limit. In such circumstances, the excess is allowed as a deduction. Any tax paid in the Mainland that is not allowed as a credit is not available to be carried
forward to subsequent years of assessment.
A claim for a tax credit is required, in accordance with section 50(9)
of the Ordinance, to be made within 2 years after the end of the relevant year of assessment. The claim can be submitted with the tax return for the relevant
year of assessment or made separately in allowance of a tax credit is to be dealt with
over the objection
and appeal provisions of the Ordinance.
Under the provisions of section 50(10) of the Ordinance, a Hong
Kong resident who considers that the tax credit allowed for a year of assessment is excessive or insufficient because of a subsequent adjustment to the amount of tax payable by either Side can make a claim within 2 years from the time when the assessment, adjustment or other determination by either Side has been made. The period for lodging the claim will not be limited by the time for raising an assessment or for lodgement of any other claim under the Ordinance. The relevant assessment, adjustment or determination must be material in determining whether and to what extent a tax credit is allowable. It should be noted that those provisions do not apply to any new claim for a tax credit, as the application for such claim should be made in accordance with