Executive summaryHong Kong’s Court of First Instance (CFI) recently handed down a favorable decision which clarified that profits tax liabilities are imposed on what a taxpayer has done to earn the profits in question, as opposed to what its role or purpose in Hong Kong is, notwithstanding that its role in Hong Kong is to mitigate the overseas tax liabilities of its group.Detailed discussionThe taxpayer was a private limited company incorporated in Hong Kong engaged in the trading of electronic products. It purchased the products from two independent Hong Kong suppliers and sold to its group company in the Netherlands....