Tax consolidation: Does it have to be complex for Hong Kong?

Antony K. F. Ting*, Daniel Ho

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review


    Group taxation regimes have become increasingly common in taxation systems. Many countries have decided to override the traditional separate legal entity doctrine and to recognise the economic substance of corporate groups by treating them as one enterprise. Despite consistent lobbying from the business community, the Hong Kong government has refused to introduce a group taxation regime. One main reason for its rejection was the perceived complexity of the regime. Based on the comparative analysis of other consolidation regimes in the world, this article argues that Hong Kong has the optimal tax system to accommodate a simple consolidation regime. This article first outlines the history of the rise of corporate groups in the last century and explains the reasons for treating a corporate group under the control of its parent company as a single taxable unit within the tax system. It then provides an overview of the different forms of group taxation regimes and their varying degrees of complexity adopted in countries around the world. Finally, it briefly reviews the approach taken to the introduction of a group taxation regime in Hong Kong, paving the way for the argument that the existing structural elements in Hong Kong's tax system, especially the non-taxation of capital gains, will reduce significantly the complexity of a tax consolidation regime. The experience of consolidation regime in other countries strongly suggests that a properly designed consolidation regime in Hong Kong is likely to be one of the simplest in the world.

    Original languageEnglish
    Pages (from-to)431-451
    Number of pages21
    JournalHong Kong Law Journal
    Publication statusPublished - 2012

    Scopus Subject Areas

    • Law


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