programmes in Taiwan between 2005 and 2009, under two Licence Agreements dated 30 May 2005 and 21 December 2006 respectively. The agreements provided for the payment by the appellant to Muse of certain amounts described as licence fees and other amounts described as technical costs. The technical costs were paid for the provision of dubbed and subtitled programming. (3) The appellant filed profits tax returns for the years of assessment 2005/06 to 2007/08, in each of which it declared adjusted losses. In each year of assessment, the appellant claimed an expense described as of licensed “amortization programming rights/subtitling costs” (“Amortization Costs”) as an allowable deduction. Included in the sums claimed under this heading were the amounts in respect of licence fees paid to Muse, which were capitalized in the appellant’s balance sheets and amortized in its profit and loss accounts over the licence periods. Following enquiries by the CIR, the appellant clarified the amounts it had paid to Muse in the relevant years of assessment as follows : (a) Year of assessment 2005/06 US$380,455 by way of – licence fee; (b) Year of assessment 2006/07 US$274,635 by way of – licence fee and US$15,300 by way of technical cost; and (c) Year of assessment 2007/08 US$269,250 by way of – licence fee and US$15,000 by way of technical cost. (4) The Assessor considered that the license fees and technical costs received by Muse from the appellant were chargeable to profits tax, and requested the appellant to file profits tax returns for Muse for the years of assessment in question. The
programmes in Taiwan between 2005 and 2009, under two Licence Agreements dated 30 May 2005 and 21 December 2006 respectively. The agreements provided for the payment by the appellant to Muse of certain amounts described as licence fees and other amounts described as technical costs. The technical costs were paid for the provision of dubbed and subtitled programming. (3) The appellant filed profits tax returns for the years of assessment 2005/06 to 2007/08, in each of which it declared adjusted losses. In each year of assessment, the appellant claimed an expense described as “amortization of licensed programming rights/subtitling costs” (“Amortization Costs”) as an allowable deduction. Included in the sums claimed under this heading were the amounts in respect of licence fees paid to Muse, which were capitalized in the appellant’s balance sheets and amortized in its profit and loss accounts over the licence periods. Following enquiries by the CIR, the appellant clarified the amounts it had paid to Muse in the relevant years of assessment as follows : (a) Year of assessment 2005/06 – US$380,455 by way of licence fee; (b) Year of assessment 2006/07 – US$274,635 by way of licence fee and US$15,300 by way of technical cost; and (c) Year of assessment 2007/08 – US$269,250 by way of licence fee and US$15,000 by way of technical cost. (4) The Assessor considered that the license fees and technical costs received by Muse from the appellant were chargeable to profits tax, and requested the appellant to file profits tax returns for Muse for the years of assessment in question. The
CACV000259_2012.docx