PLC Paper No. CB(2)626
(These minutes have been seen by the Administration and cleared by the Chairman)
Ref: CB2/BC/13/96

Bills Committee on
Mutual Legal Assistance in Criminal Matters Bill

Minutes of the meeting
held on Wednesday, 11 June 1997 at 9:00 am
in Conference Room B of the Legislative Council Building


Members present:

    Hon James TO Kun-sun (Chairman)
    Hon Emily LAU Wai-hing
    Hon Eric LI Ka-cheung, OBE, JP
    Hon Margaret NG

Members absent :

    Hon Ronald ARCULLI, OBE, JP
    Hon Andrew CHENG Kar-foo
    Hon IP Kwok-him
    Hon Bruce LIU Sing-lee

Public Officers attending :

Mr Alan CHU
Principal Assistant Secretary of Security
Mr John HUNTER
Deputy Principal Crown Counsel (International Law)
Mr Geoffrey FOX
Senior Assistant Law Draftsman
Ms Eva YAM
Assistant Secretary for Security

Clerk in attendance:

Mrs Mary TANG
Chief Assistant Secretary(2)4

Staff in attendance :

Mr Jimmy MA
Legal Adviser
Mr Stanley MA
Senior Assistant Secretary(2)9

I. Meeting with the Administration

At the request of the Chairman, Deputy Principal Crown Counsel (International Law) (DPCC(IL)) briefed the meeting on the new and revised provisions in the fifth draft of the Committee Stage Amendments (CSAs) dated 10 June 1997 pertaining to the protection of tax documents as follows -

  1. The definitions of "Tax Advisers" and "Relevant Auditors" were included in clause 2(1);

  2. The tax documents of Tax Advisers and Relevant Auditors which were exempted from compulsory production were respectively defined in Part 1 and Part 2 of the new Schedule 1;

  3. Clause 10 in relation to requests to Hong Kong for taking of evidence was amended to provide that tax advisers and relevant auditors were not compellable to give evidence in relation to a tax document or to produce a tax document;

  4. Clause 12 in relation to requests to Hong Kong for search and seizure was amended to provide that search and seizure could not apply to tax documents; and

  5. Clause 15 in relation to requests to Hong Kong for production, etc. of material was amended to preclude the production of tax documents.

2. DPCC(IL) explained that the exemption of tax document from compulsory production in relation to a MLA request from overseas jurisdiction at the investigation stage of a criminal matter was proposed to address to the concern of HKSA. Having regard to the similar provisions under the UK Tax Management Act 1970, the Administration was inclined to support the claims of HKSA and had hence made the relevant proposals in the latest set of CSAs.

3. Mr Eric LI supplemented that the proposed amendments were made with reference to the Taxes Management Act 1970 (section 20B(8)-(9)) and the Finance Act 1989 (section 144(9)-(12)) in UK and were not created for the professional accountants and other tax advisers in Hong Kong. He pointed out that the definition of tax advisers covered not only the professional accountants but also legal practitioners and other persons who were appointed to give advice on taxation matters. He indicated that the revised proposals, though not entirely satisfactory, were acceptable to the Hong Kong Society of Accountants (HKSA), given the limited time available for further scrutiny.

4. The Chairman was concerned that the definition of tax advisers i.e., "a person appointed to give advice about the tax affairs of another person (whether appointed directly by that other person or another tax adviser of that other person)", could be broadly interpreted to include all persons who were employed or asked by another person to give advice on taxation matters. Senior Assistant Law Draftsman (SALD) pointed out that the definition followed closely the provisions in relevant UK legislation. To address members' concern, he suggested and members agreed to revise the definition of tax advisers as "a person appointed bona fide to give advice, in the course of his employment or of a business carried on by him, about the tax affairs of another person (whether appointed directly by that other person or another tax adviser of that other person)".

5. Miss Margaret NG was concerned about the meaning of the word "property" in respect of the tax adviser’s ownership of a tax document. SALD explained that the word was used in the relevant UK legislation presumably to specify that only tax documents which were generated between the tax adviser and his/her client could be exempted from compulsory production. Legal Adviser (LA) pointed out that section 20B(9) of the Taxes Management Act 1970 had provided that a person who (in the course of a business carried on by him) had stood in relation to another as tax accountant could not be compelled to produce tax documents which were his (the accountant’s) property and originated as working papers of that relationship. Referring to the suggestion to remove the word "property" from the main body of the Bill, LA responded that the word "property" had the effect of limiting the scope of exemption of tax document from compulsory production and without it, all tax documents could be made exempted by way of Part 1 of Schedule 1. Members agreed to retain the word "property" in proposed clauses 10(8A), 15(9) and 12(12) and proposed to add a provision in these clauses to specify that only tax documents which were originated from the appointed tax adviser, the clients or another tax adviser of the client for or in connection with the giving or obtaining of advice about the client's tax affairs would be exempted from compulsory production.

6. As regards whether the exemption of tax documents from compulsory production was consistent with the terms of the signed MLA agreement with US, DPCC(IL) pointed out that Article 9(5) of the agreement had provided that a person from whom evidence was requested pursuant to the agreement could not be compelled to give evidence if he/she was eligible to a claim of immunity under the law of the requested party. Mr LI supplemented that UK had similar provisions under its domestic law to protect tax document against compulsory production and had been able to maintain a MLA agreement with US.

7. The Chairman was concerned about the claim of immunity in the case of a MLA request involving a serious criminal matter such as drug trafficking, robbery, etc. DPCC(IL) responded that the proposed clause 15(9)(ab)(ii) had specified that the tax advisers or relevant auditors concerned could only claim immunity when the criminal matter to which the court order related was an investigation into an external offense relating to taxation. In such cases, the court would have to decide whether the claim was justified.

8. At members’ request, DPCC(IL) went on to explain the remainng revised provisions in the latest version of CSAs dated 10 June 1997 -

  1. the definition of appropriate authority in clause 2(1) was revised to ensure that all incoming and outgoing MLA requests would be handled by the appropriate persons of the overseas jurisdiction concerned;

  2. a new clause 10(2A)(c) was proposed to provide that the court proceeding for the taking of evidence could be held in camera if the magistrate was satisfied that there were reasonable grounds for believing that it was in the interest of the person to do so or the overseas criminal matter would be substantially prejudiced if the proceedings were held in open court; and

  3. a technical amendment to include the offense of contempt of court in the proposed clause 10(12) and to delete clause 19(b)(i)(B).

9. The meeting ended at 10:30 a.m.

Provisional Legislative Council Secretariat
24 November 1997

Last Updated on 30 November 1998