Press releases

Hong Kong, June 16, 2009 – Li & Fung Ltd (“Li & Fung” or “the Group”, SEHK: 494) today welcomed the Board of Review’s decision in favour of an appeal by its subsidiary, Li & Fung (Trading) Limited (“LFT”), that offshore claim of certain non-Hong Kong sourced income of LFT is valid. On the other hand, the Board of Review disagreed with the deduction claim of certain marketing expenses and concluded that the relevant assessments in respect of such marketing expenses deduction claim should be confirmed.

The tax appeal covers LFT’s objections to its profits tax assessments for the years of assessment 1992/93 to 2001/02, in the total sum of HK$333 million.

President of Li & Fung (Trading) Limited, Mr Bruce Rockowitz said: “We are pleased that the Board endorsed our long-held contention that we should not pay Hong Kong tax on profits earned offshore.”

“We are considering the reasoning of the Board of Review’s decision which disagreed with our appeal against a finding relating to the deduction of marketing expenses, and seeking legal advice as to whether we should lodge a further appeal or not.”

LFT learnt yesterday of the Board of Review’s decision in relation to the appeal lodged by it against the determination issued by the Commissioner of Hong Kong Inland Revenue on 14 June 2004. This dispute has been disclosed in Li & Fung’s annual reports every year since the dispute was initiated in 1999.

The Group will make a further announcement on this issue after the Group and its legal representatives have studied and considered the decision in detail.