The Court of First Instance Reaffirmed the Principles for Determining the Locality of Profits

In the recent decision in Newfair Holdings Limited v. CIR, the Court of First Instance (CFI) allowed the taxpayer’s appeal and overturned the decision of the Board of Review in Case No. D14/20. The CFI reaffirmed the principles for determining the locality of profits and ruled that (i) the taxpayer did not carry on a business in Hong Kong, and (ii) its profits did not arise from commercial operations in Hong Kong. The profits of the taxpayer were non-Hong Kong sourced and not chargeable to Hong Kong profits tax.