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Hong Kong orphanage profits taxed

by
11 February 2010

by Ed Beavan

THE Hong Kong Anglican Church has been ordered to pay $HK180 million (£14.8 million) in tax on profits it made on an orphanage that it redeveloped into a luxury-housing project.

A court upheld a decision by the Hong Kong government and the Inland Revenue Review Board that profits made on the former St Christopher’s Home by the Church had not been used for charitable purposes. The building was redevel­oped in the 1990s, and the Church derived a profit of $HK1.119 billion between 1998 and 2006.

The review board said that the Church had initially set up the project on commercial principles in order to raise money for its mission, but that it had then “chosen to carry on a separate venture or enterprise of a lucrative commercial and trade character, different and distinct from its charitable work”. It had shown no evidence that profits were “not being expended substantially outside Hong Kong” — a requirement for tax exemption.

It is reported that the Church will study the judgment before deciding whether to appeal.

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