Hong Kong's Court of First Instance (CFI) recently handed down a decision1 that ruled royalties from sub-licensing certain trademarks for use in Japan to be Hong Kong-sourced income and taxable in Hong Kong.Activities performed by agents in Japan under the joint venture arrangement are not attributable to the Hong Kong taxpayer when determining its source of profits if they are not directly linked to the profit-producing activities of the taxpayer. The taxpayer was incorporated in Hong Kong by its UK parent company. The UK parent company owns certain trademarks and licensed them under a master license to the taxpayer for exploitation....