HK Profits Tax - Source of trading profits

DIPN 21 applies to determine the source of profit;

Contract effected test applies to determine the source of trading profit;

Both purchase and sales contracts effected outside Hong Kong would be exempted from Hong Kong Profits Tax;

There is no apportionment exemptions under contract effected test of DIPN 21. Either purchase or sales contract effected in Hong Kong, the profit arising from that that trade is fully taxable in Profits Tax;

"Effected" is interpreted as not just executing or signing a contract, it includes the process of negotiation to conclude the contract. Any activity occured in Hong Kong to conclude the contract is regarded as partly effected in Hong Kong. Thus, the profit from that trade transaction is fully taxable in Hong Kong.