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Chapter:

112 PDFTitle:Inland Revenue OrdinanceGazette Number:E.R. 1 of 2012
Section:23CHeading:Ascertainment of the assessable profits of a resident aircraft-ownerVersion Date:09/02/2012

(1) Where a person carries on a business as an owner of aircraft and-

    (a) the business is normally controlled or managed in Hong Kong; or
    (b) the person is a company incorporated in Hong Kong,
    that person shall be deemed to be carrying on that business in Hong Kong.
(2) Where a person is deemed to be carrying on a business as an owner of aircraft in Hong Kong under this section the assessable profits from that business for any year of assessment shall be the sum bearing the same ratio to the aggregate of the relevant sums earned by or accrued to that person during the basis period for that year of assessment as that person's total aircraft profits for the basis period bear to the aggregate of the total aircraft income earned by or accrued to that person during that the basis period for that year of assessment.
(2A) For the purposes of subsection (2) and the expression "relevant sums" in that subsection and in subsection (5), where any arrangement for relief from double taxation has effect by virtue of section 49 in respect of any person of the description mentioned in subsection (1), the relevant sums earned by or accrued to that person shall include any sums derived from, attributable to, or in respect of any relevant carriage shipped in an arrangement territory, any relevant charter hire attributable to an arrangement territory and charter hire in respect of the operation of an aircraft flying between aerodromes or airports within an arrangement territory. (Added 19 of 1996 s. 7)
(2B) Where any arrangement for relief from double taxation has effect in the circumstances mentioned in subsection (2A), then in determining the relevant sums earned by or accrued to a person for the purposes of that subsection-
    (a) subsections (3) and (4), the definitions air waybill, goods in transit, passengers in transit, post office delivery bill, and paragraph (a) of the definition relevant charter hire in subsection (5) shall apply as though in those subsections and definitions and in that paragraph, the words "an arrangement territory" were substituted for the expression "Hong Kong"; and
    (b) the remainder of the definition relevant charter hire in subsection (5) shall apply as though in that definition the words "outside an arrangement territory" were substituted for the words "outside Hong Kong". (Added 19 of 1996 s. 7)
(2C) The provisions relating to paragraph (a) of the definition relevant charter hire in subsection (2B) shall not be construed so as to exclude from the definition relevant sums in subsection (5), any sum derived from, or attributable to, or in respect of any charter hire in respect of the operation of an aircraft flying between aerodromes or airports within Hong Kong. (Added 19 of 1996 s. 7)
(2D) Subsection (2A) shall not apply to any sums derived from, attributable to, or in respect of any relevant carriage shipped in an arrangement territory and any relevant charter hire attributable to an arrangement territory where such sums are chargeable to tax in an arrangement territory. (Added 19 of 1996 s. 7)
(3) For the purposes of this section, any sums earned by or accrued to the owner of an aircraft under a charter-party (whether by demise or not) that does not, or does not purport to, extent to the whole of that aircraft shall, to the extent that those sums are derived from, attributable to, or in respect of, any outward flight or flights of that aircraft commencing from any aerodrome or airport within Hong Kong, be deemed to be derived from, attributable to, or in respect of, any relevant carriage shipped in Hong Kong.
(4) For the purposes of this section, the following sums earned by or accrued to an owner of aircraft under a charter-party otherwise that by demise shall be deemed to be derived from, attributable to, or in respect of, any relevant carriage shipped in Hong Kong-
    (a) in the case of a charter-party which is a flight charter, any sums earned by or accrued to that owner under that charter-party and derived from, attributable to, or in respect of, any outward flight or flights of that aircraft commencing from any aerodrome or airport within Hong Kong;
    (b) in the case of a charter-party which is a time charter, the sum bearing the same ratio to the aggregate of the sums earned by or accrued to that owner under that charter-party as the total number of flying hours of that aircraft flown in respect of all outward flights of that aircraft commencing from any aerodrome or airport within Hong Kong to the final destinations of those flights bear to the aggregate of the total number of flying hours of that aircraft flown in respect of all flights of that aircraft under that charter-party.
(5) In this section-
aerodrome or airport (機坪或飛機場) includes any helipad;
air waybill (空運路單) has the same meaning as in the Import and Export Ordinance (Cap 60), but does not include an air waybill which describes any aerodrome or airport in Hong Kong as the aerodrome or airport of departure or the aerodrome or airport of destination;
aircraft (飛機) includes a helicopter;
*arrangement territory (安排地區), in relation to an arrangement for the relief of double taxation, means any territory outside Hong Kong where an arrangement for the relief of double taxation has effect by virtue of section 49 in respect of any person of the description mentioned in subsection (1), deemed to be carrying on a business as an owner of aircraft in Hong Kong; (Added 19 of 1996 s. 7)
business as an owner of aircraft (以飛機擁有人身分經營業務) means a business of chartering or operating aircraft, but does not include dealing in aircraft or agency business in connection with air transport;
charter hire (租機費) means any sums earned by or accrued to an owner of an aircraft under a charter-party by demise in respect of the operation of the aircraft, but does not include any sums so earned or accrued where that charter-party does not, or does not purport to, extend to the whole of that aircraft;
goods (貨品) includes livestock and mails;
goods in transit (過境貨品), in relation to the shipment of goods aboard an aircraft, means goods-
    (a) specified in an air waybill (issued by or on behalf of an owner of aircraft) or a post office delivery bill;
    (b) brought to Hong Kong by air solely for the purpose of the onward carriage of those goods; and
    (c) in respect of which any freight charges for that onward carriage are not paid or payable in Hong Kong;
operation (營運), in relation to an aircraft, includes the use or possession of the aircraft;
owner (擁有人), in relation to an aircraft, includes a charterer of the aircraft under a charter-party;
passengers (乘客) does not include passengers in transit;
passengers in transit (過境乘客), in relation to a flight of an aircraft, means passengers-
    (a) whose passenger tickets in respect of the flight do not specify Hong Kong as the place of departure or as the place of destination; or
    (b) who-
        (i) travel to Hong Kong in any aircraft owned by an owner of aircraft and leave Hong Kong in that or any other aircraft in the same ownership; and
        (ii) not more than 24 hours after travelling to an arriving at Hong Kong, leave Hong Kong for a destination other than the one from which they had travelled;
permanent establishment (永久機構) means a branch, management or other place of business, but does not include an agency unless the agent has, and habitually exercises, a general authority to negotiate and conclude contracts on behalf of his principal;
post office delivery bill (郵政局交接清單), in relation to the carriage of mails, means any document (whether referred to as an "AV7 bill" or otherwise) which does not describe Hong Kong, or the General Post Office of Hong Kong, as the office of origin or the office of destination in respect of those mails;
relevant carriage (有關運載), in relation to an aircraft, means the carriage by air of passengers or goods, or both passengers and goods, as the case may be, but does not include the carriage of goods in transit;
relevant charter hire (有關的租機費) means charter hire other than charter hire attributable to a permanent establishment maintained outside Hong Kong by a person deemed to be carrying on a business as an owner of aircraft in Hong Kong under this section, but does not include-
    (a) charter hire in respect of the operation of an aircraft flying between aerodromes or airports within Hong Kong; or
    (b) charter hire in respect of the operation of an aircraft flying between any aerodrome or airport within Hong Kong and any aerodrome or airport within Macau;
relevant sums (有關款項) means-
    (a) any sums derived from, attributable to, or in respect of-
        (i) any relevant carriage shipped in Hong Kong;
        (ii) any relevant charter hire;
        (iii) any charter hire in respect of the operation of an aircraft flying between aerodromes or airports within Hong Kong;
    (b) one half of any sums derived from, attributable to, or in respect of, any charter hire in respect of the operation of an aircraft flying between any aerodrome or airport within Hong Kong and any aerodrome or airport within Macau;
shipped (裝運), in the case of passengers, means embarked;
shipped in an arrangement territory (在安排地區裝運的), in relation to the shipment of relevant carriage, means shipped aboard an aircraft at any aerodrome or airport within an arrangement territory; (Added 19 of 1996 s. 7)
shipped in Hong Kong (在香港裝運的), in relation to the shipment of relevant carriage, means shipped aboard an aircraft at any aerodrome or airport within Hong Kong;
total aircraft income (總空運入息), in relation to any basis period, means the worldwide income of a person from the person's business as an owner of aircraft, and indicated as such by that person's accounts for that period.
total aircraft profits (總空運利潤), in relation to any basis period, means the worldwide profits of a person from the person's business as an owner of aircraft, and indicated as such by that person's accounts for that period.
(Replaced 47 of 1992 s. 3)
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Note:
* For application of s. 23C(2A), (2B), (2C) and (2D) in respect of any arrangement with an arrangement territory, please note s. 2 of 19 of 1996, the text of which is reproduced below-

"2. Application of amendments affected by section 7
    Notwithstanding section 1(2), the amendments to section 23C of the principal Ordinance effected by section 7 of this Ordinance shall, in respect of any arrangement with an arrangement territory as defined in section 23C of the principal Ordinance following its amendment by this Ordinance, be deemed to apply and to have always applied in accordance with the terms specified in that arrangement.".