Legislative Council

LC Paper No. CB(1) 931/98-99
(These minutes have been seen
by the Administration)

Ref: CB1/BC/5/98

Bills Committee on
Adaptation of Laws (No. 6) Bill 1998

Minutes of meeting held on
Thursday, 3 December 1998, at 4:30 pm
in Conference Room B of the Legislative Council Building


Members present :

Hon Margaret NG (Chairman)
Hon Ronald ARCULLI, JP
Hon James TO Kun-sun
Hon SIN Chung-kai
Hon Jasper TSANG Yok-sing, JP
Hon Ambrose LAU Hon-chuen, JP

Members absent :

Hon Andrew WONG Wang-fat, JP
Hon Mrs Miriam LAU Kin-yee, JP

Public officers attending :

Miss Amy TSE
Principal Assistant Secretary for the Treasury (Revenue)

Miss Vivian SUM
Assistant Secretary for the Treasury (Revenue)

Mr CHAN Pak-ah
Chief Assessor (1)
Inland Revenue Department

Mr CHU Yum-yuen
Chief Assessor (2)
Inland Revenue Department

Mr LO Hing-chung
Assistant Commissioner of Rating and Valuation
Rating and Valuation Department

Mr Michael CHIK
Assistant Commissioner of Customs and Excise
Customs and Excise Department

Mr Byron LEUNG
Government Counsel (1)
Department of Justice

Miss Josephine CHUNG
Government Counsel (2)
Department of Justice

Clerk in attendance :

Mr Andy LAU
Chief Assistant Secretary (1)6

Staff in attendance :

Miss Anita HO
Assistant Legal Adviser 2

Mr Daniel HUI
Senior Assistant Secretary (1)5


I. Election of Chairman

Members agreed that Mr TSANG Yok-sing should preside over the election of Chairman. Mr TSANG invited nominations for the Chairman. Miss Margaret NG was nominated by Mr SIN Chung-kai and seconded by Mr LAU Hon-chuen to be the Chairman of the Bills Committee. Miss NG accepted the nomination.

2. There being no other nomination, Miss NG was declared Chairman of the Bills Committee. Miss NG then took the chair.

II Meeting with the Administration

- The Bill circulated under LC Paper No. CB(3)537/98-99 dated 29 October 1998

- The Legislative Council Brief issued by the Finance Bureau under file ref. FIN CR 1/3221/91 in October 1998

- The Legal Service Division report issued under LC Paper No. LS49/98-99 dated 9 November 1998

- Correspondences between the Legal Adviser and the Administration on the Bill issued under LC Paper No. CB(1)558/98-99(01) dated 2 December 1998

- Information paper provided by the Administration on the guiding principles and guideline glossary of terms applied in the adaptation of laws exercise issued under LC Paper No. CB(1)558/98-99(02) dated 2 December 1998

General issues

3. The Chairman requested the Administration to clarify in writing, as a matter of principle, whether there were any express provisions provided for in each of the Ordinances covered by the Bill to bind the State, including the Hong Kong Special Administrative Region (HKSAR) Government, and if not, the reasons for not doing so. The Principal Assistant Secretary for the Treasury (Revenue) (PAS for T/R) agreed to provide further information in writing. Admin

4. Members noted that the principles applied in the Bill were mostly in line with those stipulated in the "Guiding principles and guideline glossary of terms applied in the adaptation of laws exercise" which was prepared by the Department of Justice and circulated to members vide LC Paper No. CB(1)558/98-99(02). For provisions which were not covered by or which departed from such principles, members noted that the Administration had prepared an information note on "Adaptation of Laws (No. 6) Bill 1998 - Provisions not covered by, or which depart from, the Guideline Adaptations" to account for the variations. The information note was tabled at the meeting and subsequently circulated to members vide LC Paper No. CB(1)572/98-99.

5. Members also noted that adaptation of references to "Her Majesty's forces" would not be dealt with in the Bill for the individual Ordinances in which they were found, but would instead be dealt with in separate Bills for the subject concerned. Members also took note of the correspondences between the Legal Adviser and the Administration on the Bill issued under LC Paper No. CB(1)558/98-99(01) dated 2 December 1998.

6. Members went through the Bill clause by clause. The concerns of the Bills Committee were summarized as follows:

Schedule 1 - Betting Duty Ordinance and its subsidiary legislation (Cap. 108)

7. Members had no particular comments on Schedule 1.

Schedule 2 - Dutiable Commodities Ordinance and its subsidiary legislation (Cap. 109)

Definition of "Export" under section 2(1) of the Dutiable Commodities Ordinance (DCO)

8. Regarding the need for the proposed amendments to the definition of "export", the Assistant Commissioner of Customs and Excise (AC/C&E) advised that the main purpose of the amendments was to preserve the policy intent to cover the Mainland of China after the change of sovereignty on 1 July 1997. Moreover, references to "any country" and "another country" in the definition of "export" to cover "transhipment" was inconsistent with the definition of "transhipment cargo" in the Import and Export (Registration) Regulation (Cap. 60 sub. leg.) which referred to "a place" and "another place" respectively. Hence, the Administration had proposed adapting the terms "any country" and "another country" to "a place outside Hong Kong" and "another place outside Hong Kong" respectively. PAS for T/R added that the proposed amendments would not alter the legislative intent of the definition of "export".

9. Mr TSANG Yok-sing pointed out that the proposed amendments would effectively change the scope of the definition of transhipment because the term "export", as presently drafted, only included transhipment from one country to another country. Against this background and if the proposed amendment were adopted, the meaning of the amended definition would be extended to cover transhipment from two different places within the same country. AC/C&E advised that the existing definition of "export" covered both export and transhipment. Under the broad definition of export, a shipment from a place outside Hong Kong, say New York, and brought into Hong Kong for the sole purpose of being carried to New York after transhipment into another conveyance was still considered "export" under the first part of the existing definition.

10. Mr Ronald ARCULLI was of the view that the definition of "export" did not require any adaptation because export from Hong Kong to the Mainland would also be considered as export after 1 July 1997 under the first part of the existing definition of "export" which provided that "export means to carry or cause to be carried out of Hong Kong by land, air or water".

11. PAS for T/R said in reply to Mr James TO that with the present interpretation of the definition of "export", goods exported to the United Kingdom and Taiwan were all covered by the definition before and after 1 July 1997. Mr James TO requested the Administration to provide further information on the status of Taiwan and the United Kingdom in the context of the term "country" for the purposes of the definition of export. In view of members' queries on the justifications for the proposed adaptation and the possible variation of the meaning of the term after adaptation, the Administration undertook to provide further information to allay members' concerns.
Admin

Definition of "A.T.A. Carnet" under section 2(1) of the DCO

12. Members noted that A.T.A. Carnet was a document issued under the Customs Convention for the Temporary Admission of Goods which authorized temporary admission of goods into a custom territory without paying import duties.

13. Noting that references to "Government of the United Kingdom" would normally be proposed to be substituted by "Central People's Government", the Chairman enquired about the reasons for departing from the Guiding Principles in adapting the definition of "A.T.A. Carnet".

14. The Government Counsel (1) (GC/1) advised that in accordance with Article 153 of the Basic Law of the HKSAR, the application to the HKSAR of international agreements to which the People's Republic of China was a party should be decided by the Central People's Government after seeking the views of the Government of the HKSAR. As such, the application of the A.T.A. Convention to the HKSAR was not automatic. The proposed adaptation by replacing "so long as the United Kingdom adheres to it" by "so long as it applies to Hong Kong" was therefore more appropriate than a straight-forward adaptation. PAS for T/R supplemented that in accordance with the relevant provision of the A.T.A. Convention, the People's Republic of China had made a declaration to the effect that the Convention would be applied to the HKSAR. The proposed amendments could therefore better reflect the procedural events which had taken place.

15. In reply to Mr James TO's question, GC/1 confirmed that under Article 25 of the A.T.A. Convention, a sovereign state which was a party to the Convention could, by declaration, seek to apply the Convention to different parts of its territories on different dates. He quoted, for example, that the United Kingdom had decided that the Convention be applied to Gibraltar since 1968 and to Hong Kong since 1973.

16. The Chairman said that the proposed amendment should be acceptable as Hong Kong's obligations to other parties of the A.T.A. Convention would be maintained.

Proposed amendments to section 28A of the DCO

17. In reply to the Chairman's question, AC/C&E confirmed that the original policy intent of section 28A was that "Crown" should only cover the Hong Kong Government, and hence, the proposed amendment of "Crown" to "Government" was in order.

Proposed amendments to sections 12(1)(p) and (pa) of the Dutiable Commodities Regulations

18. Mr Ronald ARCULLI noted that the existing wordings of sections 12(1)(p) and (pa) also covered vehicles arriving from Macau and Taiwan, but the proposed amendments, if enacted, would exclude vehicles arriving from these places. Mr James TO shared Mr ARCULLI's view and expressed doubt on the proposed adaptation. The Chairman enquired about the original legislative intent of sections 12(1)(p) and (pa). In response, AC/C&E advised that the legislative intent of the section was to cover vehicles arriving from Mainland China only. The volumes of fuel which would be eligible for exemption of duty in respect of goods vehicles were also prescribed in section 12(1)(pa). However, since the term "People's Republic of China", as defined in the Interpretation and General Clauses Ordinance (Cap. 1) also included Hong Kong, Macau and Taiwan, the Administration had proposed to replace the term "People's Republic of China" in section 12(1) by "Mainland of China" so as to preserve the policy intent and the original meaning of the regulations.

19. As requested by the Chairman, PAS for T/R agreed to provide further justifications on the proposed amendments to sections 12(1)(p) and (pa) and whether vehicles which arrived Hong Kong from Taiwan by water were covered by the regulations. Admin

Proposal to repeal two Resolutions of the Legislative Council made under the DCO

20. Explaining the rationale for the proposal to repeal the two Resolutions, PAS for T/R advised that one of the Resolutions granted duty exemption on rum issued to Gurkha troops who were employed by the United Kingdom Government to serve in Hong Kong. This employment arrangement for Gurkha troops to serve in Hong Kong had ceased after 1 July 1997. The other Resolution granted duty exemption to the Royal Nepalese Liaison Officer on the basis that a reciprocal exemption was given to the British Army serving in Nepal. This reciprocity was no longer relevant after 1 July 1997. The Administration had, therefore, proposed to repeal the two Resolutions.

21. Whilst noting the Administration's arguments, the Chairman requested the Administration to provide further justifications for the proposal. She also asked for the reason for not adapting the references to "Gurkha troops" or "Royal Nepalese Liaison Officer" as "People's Liberation Army" or other terms as appropriate. PAS for T/R agreed to provide further information. Admin

Schedule 3 - Estate Duty Ordinance and its subsidiary legislation (Cap. 111)

Proposed amendments to section 21 of the Estate Duty Ordinance (EDO)

22. The Government Counsel (2) (GC/2) said that the section exempted estate duty arising from the estate of those who died from active service against the enemy during the war time between 8 December 1941 and 16 September 1945. For the sake of clarity, the phrase "against the enemy" should be adapted to "against a state then at war with the United Kingdom" so as to preserve the policy intent and original meaning of the provisions.

23. Mr James TO agreed with the proposed adaptation to section 21(a)(i) but enquired about the need to adapt "His Majesty" to "the United Kingdom" under section 21(a)(ii).

24. The Chairman pointed out that for the sake of clarity "His Majesty" had to be adapted because after 1 July 1997, the term "His Majesty" would be subject to interpretation. It would improve on clarity if "His Majesty" was adapted to "the United Kingdom". GC/2 supplemented that since
in the Chinese version had to be amended to , it would be more consistent if
the English version was adapted in the same way. Prescription of Forms under Section 28 of the EDO

25. The Assistant Legal Adviser 2 enquired about the reason for not adapting the term "Governor in Council" used in the subsidiary legislation on Prescription of Forms under Section 28. The Chief Assessor (2) of Inland Revenue Department (CA(2)/IRD) advised that the term was not adapted because it was used as a historical reference. However, when the Commissioner of Inland Revenue was to be authorized to prescribe forms to be used under the Ordinance in future, corresponding amendments to the reference would be made.

Schedule 4 - Inland Revenue Ordinance (Cap. 112)

Proposed amendments to section 2(1) of the Inland Revenue Ordinance (IRO)

26. Replying to the Chairman's question, PAS for T/R advised that it was not necessary to adapt the definition of "Governor" under section 2 of IRO as the corresponding term "Chief Executive" had separately been defined in the Interpretation and General Clauses Ordinance (Cap. 1). Hence, the Administration had proposed to repeal the said definition.

Section 4 (4)(c) of the IRO

27. The Chairman enquired whether the term "Attorney General" used in the section would be adapted. GC/1 replied in the affirmative but advised that the adaptation had already been dealt with under a separate Legal Notice.

Proposed amendments to section 8(2)(h) of the IRO

28. Explaining the basis of the proposed amendments, the Chief Assessor (1) of Inland Revenue Department said that section 8(2)(h) was concerned with the granting of salaries tax exemption to staff employed temporarily by the United Kingdom Government to serve in Hong Kong. The Administration had proposed to replace the references to "Government of the United Kingdom" and "United Kingdom" by "Central People's Government" and "Mainland of China" respectively in order to be consistent with the arrangement before the transfer of sovereignty.

29. Noting that consulate staff in Hong Kong who were citizens of the state which they represented were granted salaries tax exemption under section 8(2)(b) of the IRO, Mr James TO enquired about the different circumstances under which section 8(2)(b) and 8(2)(h) would apply. PAS for T/R replied that section 8(2)(b) provided for a general exemption of salaries tax to consulate staff who were citizens of the state represented by them. On the other hand, salaries tax exemption provided under section 8(2)(h) was specific to persons working in Hong Kong in the temporary service of the United Kingdom Government. As the spirit of the tax exemption arrangement provided for under section 8(2)(h) should be preserved, adaptation of the section had therefore been proposed.

30. The Chairman noted that whilst the Administration had proposed to repeal two Legislative Council Resolutions related to exemption of duty payable on dutiable commodities by the Gurkha troops and the Royal Nepalese Liaison Officer respectively under the DCO, the Administration had taken a different approach in handling the adaptation of relevant provisions governing the granting of salaries tax exemption to staff employed temporarily by the United Kingdom Government to serve in Hong Kong under section 8(2)(h) of the IRO. As a result, the Administration had proposed to grant exemption in respect of emoluments payable by the Central People's Government under similar circumstances after the change of sovereignty instead of a simple repeal as in the case of the two Legislative Council Resolutions made under the DCO. PAS for T/R said that she would provide further justifications on the proposed deletion of the LegCo Resolutions made under the DCO and the proposed adaptation of section 8(2)(h) of the IRO. Admin

Proposed amendments to the definition of "operator of a Hong Kong aircraft" in section 39E(5) of the IRO

31. GC/1 advised that reference to "Air Navigation (Overseas Territories) Order 1977 (App. III, p. DPI) by the Governor of Hong Kong" referred to in the definition of "operator of a Hong Kong aircraft" should have been replaced by a localised Order "Air Navigation (Hong Kong) Order 1995 (L.N. 561 of 1995)" which had become effective since 1995. GC/1 also advised that the amendment still fell within the scope of adaptation of laws as the proposal dealt with the adaptation of an United Kingdom order which should not be retained in the legislation of Hong Kong. As such, the proposed adaptation was only a consequential amendment.

32. The Chairman pointed out that the proposed amendment was to rectify an omission which should have been done in 1995 when the Air Navigation (Hong Kong) Order 1995 was made. She asked if it was appropriate to propose the said amendment in the present exercise. To address the Chairman's concern, PAS for T/R undertook to provide additional justifications for dealing with the proposed amendment under the adaptation of laws exercise. Admin

Schedule 5 - Rating Ordinance (Cap. 116)

33. Members had no particular comments on proposed amendments to the Rating Ordinance as specified in the Bill.

Schedule 6 - Stamp Duty Ordinance (Cap. 117)

Proposed amendment to sections 5(5) and 5A(4) of the Stamp Duty Ordinance (SDO)

34. In reply to the Chairman's question, CA(2)/IRD confirmed that the term "Crown" used in sections 5(5) and 5A(4) of the SDO referred only to the Hong Kong Government. On this basis, the Administration had proposed to replace "Crown" by "Government" in the said sections.

Proposed amendments to section 29A of the SDO

35. Elaborating on the proposed amendment, GC/2 confirmed that the proposed replacement of "Crown lease" by "Government lease" was in accordance with the guiding principles for the Adaptation of Laws Programme issued by the Department of Justice in November 1998.

III Any other business

36. Members agreed that the next meeting of the Bills Committee would be held on 29 December 1998 at 4:30 pm to continue scrutiny of the Bill.

37. There being no other business, the meeting ended at 6:30 pm.

    (Post meeting note : Additional information on concerns raised by members had been provided by the Administration and circulated to members vide LC Paper No. CB(1) 677/98-99 dated 28 December 1998.)


Legislative Council Secretariat
5 March 1999