What do fung shui master Tony Chan Chun-chuen and US Republican presidential candidate Mitt Romney have in common? Well, if it's about taxes, they have a lot to share. Both have exploited the peculiarities of tax systems to avoid paying heavy taxes. And in their bid for empire, they have both exposed their industries to the unwanted attention of taxmen.
For years, fung shui consultants in Hong Kong received red packets from clients for their trouble. They didn't consider this method of compensation income, and few ever declared it. But our elite fung shui masters routinely receive tens of thousands or even millions of dollars from our billionaires for their other-worldly insights. In Chan's case, we are talking about billions that he received from the late Nina Wang Kung Yu-sum.
Not satisfied, Chan launched a probate to claim Wang's entire estate, including the control of Chinachem, the city's largest private developer. He lost.
Disclosure in court about the astronomical sums he received from Wang led lawmakers to demand a decision from the inland revenue commissioner to declare whether fung shui payments were income. The top taxman was clear on this point and Chan was slapped with a HK$330 million profits tax bill. In July, Chan lost a Court of Appeal application to take his case to the highest court.
Thanks to Chan, every fung shui man or woman now has to declare consultancy payments.
Now, what of Romney? He said he paid at least 13 per cent in taxes each year during the past decade. And you think Hong Kong has low taxes!