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100+ Free HKICPA QP Module 9 Principles of Taxation Practice Questions

Prepare for the HKICPA Qualification Programme Associate Level Module 9 Principles of Taxation (Hong Kong) exam with instant access — no signup required.

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Key Facts: HKICPA QP Module 9 Principles of Taxation Exam

Module 9

Associate Level Principles of Taxation — HK profits, salaries, property tax, stamp duty and personal assessment

https://www.hkeaa.edu.hk/en/IPE/hkicpa/index.html

Objective-type CBE

Associate Module 9 assessed as a closed-book computer-based examination with objective-type questions

https://www.hkicpa.org.hk/en/Become-a-Hong-Kong-CPA/Qualification-Programme

HKEAA centres

Associate Modules 1–9 sat at equipped examination centres (Hong Kong)

https://www.hkeaa.edu.hk/en/IPE/hkicpa/index.html

December diet

Module 9 offered in the December Associate session

https://www.hkeaa.edu.hk/en/IPE/hkicpa/index.html

100

Free original practice questions in this bank

OpenExamPrep

HKICPA QP Associate Module 9 Principles of Taxation is a closed-book objective-type CBE on Hong Kong profits tax, salaries tax, property tax, stamp duty and personal assessment under the Inland Revenue Ordinance. It is delivered at HKEAA-equipped centres (Associate Modules 1–9) and sits in the December diet. Confirm duration, fees and pass rules via HKICPA/HKEAA. This 100-question MCQ bank gives original practice across the three content areas.

Sample HKICPA QP Module 9 Principles of Taxation Practice Questions

Try these sample questions to test your HKICPA QP Module 9 Principles of Taxation exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Which of the following statement best describes the 'territorial principle' of taxation as applied in Hong Kong?
A.Both residents and non-residents are subject to tax on their worldwide income, provided they reside in Hong Kong for more than 180 days.
B.Only residents of Hong Kong are subject to taxation on profits arising in or derived from Hong Kong.
C.Profits and income are only chargeable to tax if they arise in or are derived from Hong Kong, regardless of the residence status of the taxpayer.
D.Income is subject to tax based on the residence of the payer of the income, rather than where the services are performed.
Explanation: Under the Inland Revenue Ordinance (IRO), Hong Kong adopts a territorial basis of taxation. Tax is charged only on profits and income arising in or derived from Hong Kong. The residency status of the taxpayer is generally irrelevant to tax liability, except where specific double tax agreement benefits are claimed.
2What is the legal status of the Departmental Interpretation and Practice Notes (DIPNs) issued by the Inland Revenue Department (IRD)?
A.They constitute subsidiary legislation and are binding on both the taxpayer and the courts.
B.They represent the IRD's interpretation of tax provisions and are binding on the taxpayer but not on the courts.
C.They have no legal binding force on either the taxpayers or the IRD, although they reflect the department's administrative practice.
D.They are binding on the IRD as administrative statements of practice, but they do not have the force of law and are not binding on taxpayers or the courts.
Explanation: DIPNs are issued by the IRD for the information and guidance of taxpayers. They do not have the force of law and are not binding on taxpayers or the courts. However, they are binding on the IRD's own officers as administrative practice until they are withdrawn or overridden by case law.
3Under Section 51C of the Inland Revenue Ordinance (IRO), for how long must a person carrying on a trade, profession, or business in Hong Kong retain sufficient records of their transactions?
A.For a period of not less than 5 years after the end of the basis period for the year of assessment.
B.For a period of not less than 7 years after the completion of the transactions to which they relate.
C.For a period of not less than 6 years from the date the tax return is submitted to the IRD.
D.For a period of not less than 10 years after the end of the year of assessment in which the transactions occurred.
Explanation: Section 51C of the IRO mandates that every person carrying on a trade, profession, or business in Hong Kong must keep sufficient records in the English or Chinese language to enable their assessable profits to be readily ascertained. Such records must be retained for at least 7 years after the completion of the transactions to which they relate.
4Under Section 64 of the Inland Revenue Ordinance (IRO), what is the statutory time limit for a taxpayer to submit a valid written notice of objection against an assessment?
A.Within 14 days from the date of the notice of assessment.
B.Within 30 days from the date of the notice of assessment.
C.Within 1 month after the date of the notice of assessment.
D.Within 60 days after the end of the year of assessment to which the objection relates.
Explanation: Section 64(1) of the IRO states that a taxpayer objecting to an assessment must give notice of objection in writing to the Commissioner within 1 month after the date of the notice of assessment. The notice must state precisely the grounds of objection.
5Which of the following taxes is NOT levied under the Inland Revenue Ordinance in Hong Kong?
A.Property Tax on rental income derived from immovable property.
B.Salaries Tax on income derived from an office or employment.
C.Profits Tax on profits derived from carrying on a trade or business.
D.Capital Gains Tax on the disposal of shares held as long-term investments.
Explanation: Hong Kong's tax system is schedular and only taxes income that falls under Salaries Tax, Profits Tax, or Property Tax. There is no general Capital Gains Tax in Hong Kong. Disposal gains of shares held as capital assets are not subject to tax.
6In interpreting Hong Kong tax law, what is the role and status of decisions made by courts in other Commonwealth jurisdictions, such as the UK or Australia?
A.They are binding precedents that Hong Kong courts and the IRD must follow.
B.They have no relevance whatsoever, because Hong Kong is no longer a Commonwealth territory.
C.They are persuasive authorities that may be referred to by Hong Kong courts, especially where the statutory provisions are similar.
D.They override the provisions of the Inland Revenue Ordinance if they represent more recent common law developments.
Explanation: Decisions of jurisdictions outside Hong Kong, particularly Commonwealth jurisdictions sharing common law origins and similar statutory phrasing (like the UK or Australia), are persuasive authorities rather than binding precedents. Hong Kong courts often refer to them for guidance in interpreting tax law principles.
7Under Section 59(3) of the Inland Revenue Ordinance, under what circumstances can the assessor make an estimated assessment on a taxpayer?
A.Only when the taxpayer requests the assessor to estimate their tax liability due to lost records.
B.When a taxpayer fails to submit a tax return within the prescribed time limit, or submits a return that the assessor does not accept.
C.Only when the taxpayer is planning to leave Hong Kong permanently in the near future.
D.When the taxpayer's business undergoes a change of accounting date that causes a tax dispute.
Explanation: Section 59(3) of the IRO empowers the assessor to make an estimated assessment if a person fails to furnish a return within the stipulated time, or if the assessor does not accept the return as furnished. The assessor may estimate the sum on which such person is chargeable to tax.
8During an appeal hearing before the Board of Review (Inland Revenue Ordinance), upon which party does the burden of proof lie under Section 68(4)?
A.The burden of proof lies entirely on the assessor who made the assessment.
B.The burden of proof lies on the appellant (the taxpayer) to prove that the assessment appealed against is excessive or incorrect.
C.The burden of proof is shared equally between the taxpayer and the IRD.
D.The burden of proof lies on the Commissioner of Inland Revenue to justify the tax rate applied.
Explanation: According to Section 68(4) of the IRO, the burden of proving that the assessment appealed against is excessive or incorrect lies on the appellant (the taxpayer). This is a vital administrative principle in Hong Kong tax appeals.
9Under Section 82A of the Inland Revenue Ordinance (IRO), what is the maximum amount of penalty that the Commissioner or the Board of Review may impose by way of additional tax for making an incorrect return without a reasonable excuse?
A.A fine of HK$10,000 and 10% of the tax undercharged.
B.An amount equal to the tax undercharged.
C.Double the amount of the tax undercharged.
D.Treble the amount of the tax undercharged (300% of the tax undercharged or which would have been undercharged).
Explanation: Section 82A of the IRO provides that any person who, without reasonable excuse, makes an incorrect return, is liable to be assessed to additional tax of an amount not exceeding treble (three times or 300%) the amount of tax undercharged as a penalty.
10Which of the following characteristics does NOT represent a feature of the Hong Kong tax system?
A.Low tax rates compared to other developed economies.
B.Levy of a broad-based Value Added Tax (VAT) or Goods and Services Tax (GST).
C.Territorial basis of taxation.
D.Absence of general dividend withholding tax and capital gains tax.
Explanation: Hong Kong does not levy any Goods and Services Tax (GST) or Value Added Tax (VAT). It relies primarily on direct taxes (Profits Tax, Salaries Tax, Property Tax) and specific indirect taxes like stamp duty and duties on specific goods.

About the HKICPA QP Module 9 Principles of Taxation Exam

HKICPA Qualification Programme Associate Level Module 9 Principles of Taxation covers Hong Kong taxation under the Inland Revenue Ordinance for prospective Hong Kong CPAs. Coverage spans the tax system and administration (sources of tax law, IRO administration, assessments, objections and appeals), property/salaries tax and personal assessment (Property Tax liability and the 20% statutory deduction for repairs, Salaries Tax scope/exclusions/deductions/allowances, Personal Assessment election and computation), and profits tax and stamp duty (chargeability, locality of profits/source rules, deductible and non-deductible expenses, depreciation allowances, and stamp duty rate scales and exemptions). Assessment is a closed-book objective-type computer-based examination sat at HKEAA-equipped centres for Associate Modules 1–9; Module 9 sits in the December diet.

Assessment

Associate Level Module 9 Principles of Taxation — closed-book computer-based examination (objective-type items; this bank practises MCQs) covering the Hong Kong tax system and administration, property/salaries tax and personal assessment, and profits tax and stamp duty under the Inland Revenue Ordinance.

Time Limit

Module 9 sits in the December diet. Confirm the examination duration on the HKICPA/HKEAA December timetable for your sitting.

Passing Score

Per HKICPA QP examination regulations — confirm the current Associate Module pass standard in the Student Handbook / Learning Centre for your sitting.

Exam Fee

Per current HKICPA QP examination fee schedule for Associate modules (published to registered students). Confirm the Module 9 enrolment fee in the Student Centre before the enrolment deadline. (Hong Kong Institute of Certified Public Accountants (HKICPA); CBE delivery with Hong Kong Examinations and Assessment Authority (HKEAA))

HKICPA QP Module 9 Principles of Taxation Exam Content Outline

15%

Tax System and Administration

Hong Kong tax system concepts, sources of tax law, tax administration under the Inland Revenue Ordinance (IRO), assessments, objections, and appeals.

40%

Property, Salaries Tax and Personal Assessment

Property Tax liability and calculations, Salaries Tax scope, income exclusions, deductions, allowances, and the election and calculation of Personal Assessment.

45%

Profits Tax and Stamp Duty

Profits Tax liability, locality of profits (source rules), deductible and non-deductible expenses, depreciation allowances, and Stamp Duty rate scales and exemptions.

How to Pass the HKICPA QP Module 9 Principles of Taxation Exam

What You Need to Know

  • Passing score: Per HKICPA QP examination regulations — confirm the current Associate Module pass standard in the Student Handbook / Learning Centre for your sitting.
  • Assessment: Associate Level Module 9 Principles of Taxation — closed-book computer-based examination (objective-type items; this bank practises MCQs) covering the Hong Kong tax system and administration, property/salaries tax and personal assessment, and profits tax and stamp duty under the Inland Revenue Ordinance.
  • Time limit: Module 9 sits in the December diet. Confirm the examination duration on the HKICPA/HKEAA December timetable for your sitting.
  • Exam fee: Per current HKICPA QP examination fee schedule for Associate modules (published to registered students). Confirm the Module 9 enrolment fee in the Student Centre before the enrolment deadline.

Keys to Passing

  • Work through all 100 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

HKICPA QP Module 9 Principles of Taxation Study Tips from Top Performers

1Memorize the Salaries Tax deduction rules, especially the criteria for deducting home loan interest, elderly care expenses, and qualifying self-education expenses.
2Understand the difference between the source rules (locality of profits) for trading profits (where contracts are negotiated and concluded) and manufacturing profits (where manufacturing operations take place).
3Learn the main types of stamp duty on immovable property in Hong Kong: Ad Valorem Stamp Duty (AVD), Special Stamp Duty (SSD), and Buyer's Stamp Duty (BSD).
4Practice calculating Property Tax: remember that the statutory deduction for repairs and outgoings is a flat 20% of the assessable value after deducting rates paid by the owner.
5Understand when Personal Assessment is beneficial compared to separate taxation for individuals with business losses, property interests, and mortgage interest payments.

Frequently Asked Questions

What is HKICPA QP Associate Module 9 Principles of Taxation?

It is an Associate Level module of the HKICPA Qualification Programme covering the Hong Kong tax system and administration, property/salaries tax and personal assessment, and profits tax and stamp duty under the Inland Revenue Ordinance.

How is Module 9 assessed?

It is a closed-book computer-based examination using objective-type questions. Associate Modules 1–9 are taken at HKEAA-equipped centres in Hong Kong (with Mainland centre arrangements as published).

When can I sit Module 9?

Module 9 sits in the December Associate diet. Confirm the date and duration on the current HKICPA/HKEAA December timetable for your sitting.

Does Module 9 test stamp duty and tax administration?

Yes. The syllabus includes administration of the Inland Revenue Ordinance (objections, appeals, penalties) and the application of the Stamp Duty Ordinance in Hong Kong.

Are these official HKICPA past questions?

No. These are original OpenExamPrep practice questions modelled on the Module 9 content areas. Use HKICPA Learning Centre materials and the official CBE practice platform for institute resources.