''Commissioner of Inland Revenue v George Andrew Goepfert'', also known as the ''Goepfert case'', is a leading
Hong Kong
Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
tax case, affecting jurisprudence relating to the territory's
salaries tax
Salaries tax is a type of income tax that is levied in Hong Kong, chargeable on income from any office, employment and pension for a year of assessment arising in or derived from the territory. For purposes of calculating liability, the per ...
.
Background
Goepfert was a US citizen employed by
Exxon Corporation
ExxonMobil Corporation (commonly shortened to Exxon) is an American multinational oil and gas corporation headquartered in Irving, Texas. It is the largest direct descendant of John D. Rockefeller's Standard Oil, and was formed on November 30 ...
, seconded to its subsidiary operating out of Hong Kong. At all times, he was paid by Exxon in US currency, he reported directly to Exxon, the subsidiary's role was strictly secretarial, and his services were for the benefit of other affiliated companies outside Hong Kong.
The Commissioner of Inland Revenue, for the period of twelve months ended 31 March 1982, assessed Goepfert for liability for salaries tax. During that period he had rendered 41 days of his services outside Hong Kong and, apart from some overseas leave, had rendered the remainder of his services in Hong Kong. On appeal, the Board of Revenue, applying a "totality of facts" approach, ruled that Goepfert was liable for tax only for the salary earned during that part of the year in which he was in Hong Kong.
The Commissioner appealed the Board's ruling to the
Hong Kong Court of First Instance.
Court of First Instance
The Board's ruling was upheld. In so doing, the Court ruled that, as a matter of statutory interpretation, liability for salaries tax arises from two separate sources:
:* employment income and pensions arising or derived from Hong Kong, and
:* income (subject to certain exceptions) derived from services rendered in Hong Kong.
Impact
''Goepfert'' points out that the following factors must be taken into account to determine where the source of income arises for an employment (whether inside or outside the territory):
#where the contract of employment was negotiated, entered into and is enforceable;
#where the employer is resident; and
#where the employee's remuneration is paid to him.
The
Hong Kong Inland Revenue Department has issued guidance relating to its interpretation of the case.
References
External links
* {{cite web, title = ''Inland Revenue Ordinance'', Cap. 112, s. 8 (Charge of salaries tax), url = http://www.legislation.gov.hk/blis_ind.nsf/CurAllEngDoc/F284BCF711EA38B5482579C700084B3C?OpenDocument, publisher = Hong Kong Government
Taxation in Hong Kong