Footwear giant Yue Yuen Industrial (Holdings), the world's largest supplier of branded athletic and casual shoes, is seeking a judicial review in a HK$1.29 billion tax dispute with the Inland Revenue Department.
The group filed an application with the High Court yesterday, asking it to quash the tax authority's more than HK$1 billion assessment, as well as the HK$432.91 million in tax reserve certificates for eight subsidiaries in six consecutive financial years starting in 1997.
The judicial review application said that beginning in March 2004, the Inland Revenue issued a series of notices of tax assessments on Yue Yuen's eight subsidiaries whose manufacturing operations were outside Hong Kong.
The firm objected to the tax assessments, which amounted to HK$1.29 billion for the six financial years, saying its operations were conducted outside of Hong Kong.
Nevertheless, it paid HK$314.53 million to buy so-called tax reserve certificates for the first five years as requested by the tax authority until a final decision was made, the application said.
Yue Yuen described the purchase as a strain on the company's cash flow.
Earlier last month, the Inland Revenue notified Yue Yuen that it needed to buy an additional HK$118.39 million worth of tax reserve certificates, which was half of the HK$236.77 million in tax being demanded for the financial year 2002-03.