Friday, 15 July 2016

Hong Kong Updates- Money Laundering/ International Tax/ Employment

Money Laundering
The Hong Kong Court of Final Appeal (CFA) dismissed Carson Yeung’s (owner of Birmingham City football club) appeal against his conviction for “money laundering”, contrary to Section 25(1) of the Organised and Serious Crime Ordinance (OSCO). Essentially, the case establishes that a money laundering offence could occur even if the funds were in fact clean, if the accused should have suspected that they were the proceeds of crime. In other words, the essence of the offence is intention (mens rea) rather than facts (actus reus).
Part of the rationale for this is the difficulty in sophisticated money laundering schemes of proving the tainted nature of the funds. Some people may be troubled by the idea that, if you can’t prove the underlying offence then you should just assume it.

International Tax
The Hong Kong government announced that it will join the OECD as an Associate in the BEPS (base erosion and profit shifting) project, thereby committing to the 4 minimum standards of:
(i) countering harmful tax practices;
(ii) preventing treaty abuse;
(iii) transfer pricing documentation in respect of country-by-country reporting requirements; and
(iv) making dispute resolution mechanisms more effective.
 
Employment
The government announced that it was unlikely that the proposed changes to the employment legislation would be passed in the current term of the Legislative Council. The key change proposed is to allow the Labour Tribunal to make an order for reinstatement of an employee without the consent of the employer. As proposed, an employer would have an alternative (to reinstatement) of paying the employee a maximum of three times the employee's average monthly wages (capped at HK$50,000), exclusive of other existing remedies.


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