Li Ka-shing's Hutchison Whampoa might lose tax-relief case in UK

Companies owned by Li Ka-shing's Hutchison Whampoa might lose a bid for tax relief on losses by the conglomerate's British mobile phone unit because the parent company was based outside the European Union, an adviser to the bloc's top court said.

Britain was allowed to exclude such companies from relief because their group parent was not based in the EU, Niilo Jaeaeskinen, an advocate general at the EU Court of Justice in Luxembourg said in a non-binding opinion on Thursday.

Britain could not deny tax relief to companies with parent companies inside the 28-nation bloc, he said.

The case follows two decisions by the EU's top court on the legality of Britain's corporate tax rules. A 2005 ruling in a case involving Marks & Spencer said that EU rules allowed companies to deduct foreign losses from their tax bill in some cases.

In a case last year involving Royal Philips Electronics, the court said that Britain must allow the local unit of a Dutch company to deduct losses from its British tax bill.

In Thursday's case, Hutchison Whampoa companies, which include Britain's Superdrug and the British arm of the Dutch Kruidvat health-care chains, sought relief for the losses of Hutchison 3G UK.