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Hong Kong Tax News Flash 

Nov 2013, Issue 13

The highest court held "unrealised profits are not taxable but unrealised losses may be deductible"

The Court of Final Appeal (CFA) handed down its judgment in the Nice Cheer Investment Ltd. v CIR on 12 November 2013. The CFA dismissed the Commissioner’s appeal and upheld the decisions of the lower courts that unrealised revaluation profits recognised in the taxpayer's accounts are not taxable but unrealised revaluation losses of the taxpayer in this case are deductible. As a result of the CFA judgment, it is likely that the Inland Revenue Department will have to change its current assessing practice of taxing unrealised profits from revaluation of trading securities. This News Flash discusses the CFA judgment and shares our observations on the implications of the judgment.

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Reynold Hung
China South and Hong Kong Tax Leader
Hong Kong
Tel: +[852] 2289 3604 Email
Oscar Lau
Hong Kong
Tel: +[852] 2289 5603 Email