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Companies are Locking Up
Low Interest Rates in 2017
 
Many companies have put old fears of borrowing in a lackluster economy behind, seemingly replacing them with new fears of missing out on the lowest interest rates in generations.With interest rates set to rise in coming years, companies are eager to lock in cheap debt.

Driving these spirits is belief in a near-certain significant rise in long-term interest rates as the Fed backs off its stimulus effort known as quantitative easing in the next few quarters. There is also a renewed sense of confidence that the recovery won't falter. So companies that have a specific use for cash are making the move before costs go up. Consumers would do well to consider the same strategy.

Like so many others, Buffett expects the cost of money to rise appreciably in coming years.The recent lull follows blistering activity in the spring, when many homebuyers acted quickly—precisely to lock in mortgage rates at historic lows. It was a smart move.

A World of Cheap Money
 

Never in recent economic history have interest rates been so low for so many for so long. It is a safe bet that central banks in America, Britain, the euro zone, Japan and Switzerland will not be increasing short-term interest rates this year.

Big companies have taken the opportunity to borrow in the debenture andbond markets, locking in cheap financing for years to come. But the cheap money has not led to the growth-igniting investment spree the monetary policy was designed to encourage.

As a result many multinationals can borrow money more cheaply than European governments.

Borrow rates have not just made life easier for some consumers and big companies by reducing their borrowing costs. They have also allowed firms to substitute debt for equity. This usually boosts earnings per share, which makes it an attractive choice for executives motivated by share options.

Notice of Listing on the
Stock Exchange of Hong Kong Limited
 

Nuoxi Capital Limited (诺熙资本有限公司)(the "Issuer")(incorporated with limited liability in the British Virgin Islands and a wholly-owned subsidiary of Hong Kong JHC Co., Limited) U.S.$300,000,0004.575 per cent.

Guaranteed Bondsdue 2020(the "Bonds") (Stock Code: 5436) unconditionally and irrevocably guaranteed by Hong Kong JHC Co., Limited (the "Guarantor")

with the benefit of a Keep well Deed and a Deed of Equity Interest Purchase Undertaking provided by Peking University Founder Group Company Limited (the "Company").

Congratulations
To Nuoxi Capital Limited
 

Congratulations to Nuoxi Capital Limited (Stock code: 5436) and a wholly-owned subsidiary of Hong Kong JHC Co., Limited on its successful listing on the Bonds Market of The Stock Exchange of Hong Kong Limited this month.

Global CPA are glad to provide professional service for Nuoxi Capital Limited (stock code : 5436).

Global CPA (HK) Company Limited is proud to provide professional service for China Packaging Group Company Limited (stock code : 0572).

Global CPA Limited is the reporting accountants in the listing engagement led by, led by our management , also provided financial, accounting and tax review services in the listing engagement of ECI Group.

We take this opportunity to express our appreciation to the teams and give our tribute to ECI Group for its successful listing. We wish ECI Group a prosperous future and continuing success in the industry.

Guidelines and Procedures
For Issue of Debentures in HK
 

1. The object of the issue can be either to raise long-term funds for the financing of any expansion or diversification project or to augment the long-term resources of the company for working capital requirements.

2. The amount of issue debentures in the case of working capital requirements shall not exceed certain per cent of the gross current assets, loans and advances. The amount of issue of debentures for project financing will be considered on the basis of the approvals of the scheme of finance by the financial institutions/ government under the provisions.

3. The debt-equity ratio including the proposed debenture issue shall not normally exceed 2:1. For this purpose— 'Debt will mean all term loans, debentures and bonds with an initial maturity period of five years or more, including interest accrued thereon. It also includes all deferred payment liabilities but it does not include short-term bank borrowings and advances, unsecured deposits or loans from the public, shareholders and employees, and unsecured loans or deposits from others. It should also include the proposed debenture issue.

4. The debentures shall be listed on the stock exchange of Hong Kong.

5. Only secured debentures will be permitted for issue to the public.

6. The issue of debentures shall be underwritten. A relaxation is permitted in this regard if the Controller of Capital Issues is otherwise satisfied that the issue need not be underwritten.

7. The shares of the company proposing to issue the debentures must be listed in one or more stock exchanges and the market quota¬tion of its equity shares must have been at or above par value during the six months prior to the date of application for issue of debentures.

Taxes on Company
Lending/Borrowing Debentures in HK
 

One condition for the deductibility of interest relates to corporate borrowings through debentures or other marketable debt instruments. In those cases, interest deduction is allowed for the issuer only where the debentures are listed on a recognized stock exchange, or the debt instruments are issued either:

• Bona fide and in the course of carrying on business and is marketed in Hong Kong or another major financial Centre.

• Under any arrangements, where the issue of an advertisement, invitation or document in relation to the agreement or arrangements to the public has been authorized by the Securities and Futures Commission.

Interest on debentures issued under the Loans Ordinance or the Loans (Government Bonds) Ordinance and any profit arising in relation to bonds are exempt from profit tax. Both ordinances effectively deal with loans made to the government.

It is more common for debentures to be in registered form. However, if the register is not required to be kept in Hong Kong, stamp duty does not apply as it can fall outside the definition of Hong Kong stock. Convertible debentures give rise to additional stamp duty issues, as their conversion into Hong Kong stock may trigger further stamp duty liability as a transfer of Hong Kong shares from the issuer to the bondholder.

There are several exemptions potentially applicable to taking a debentures outside of the stamp duty net. However, planning with product features is required. For example, if the debentures is not denominated in Hong Kong dollars, it is not subject to stamp duty.An exemption from stamp duty in relation to transfer within a corporate group is available for transferors and transferees that are associated by not less than 90% of the issued share capital of each other.

Profits Tax of Interest Received

Only interest arising in or derived from Hong Kong is liable to profits tax. For many years, the Department has taken the view that for the purpose of determining the place where interest arises or is derived from, it is the location of the originating cause that almost invariably determines the source. In essence, the place of derivation of interest is the place where the credit was provided to the borrower, i.e. the place where the funds from which the interest is derived were provided to the borrower, commonly known as the "provision of credit" test.

Double Taxation Relief

When taxes of substantially the same nature as tax imposed under the IRO are charged elsewhere on such interest or gains then, provided the Commissioner is satisfied that the overseas taxes have been paid, a deduction is granted for those taxes in ascertaining the profits chargeable to profits tax. Where the overseas tax is charged on the gross amount of earnings and is payable regardless of whether or not a profit is derived such that it falls outside the ambit of this relief, then a deduction will be considered under the principal provision of section 16(1).

Feel free to contact us (info@cpachina.com.hk), if you need more informations.

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