Business

What is business?

Business could be conducted on permanent basis or temporarily, which goes to explain why the ITP used
the word “conduct” rather than “Carrying on...”

“Commercial” is intended that the reference to “commercial activity” be interpreted broadly to mean any
activity conducted for financial gain. The key indicators that an activity is conducted for financial gain
are profit motive and the existence of system and organisation to the activity conducted (i.e. it is more
than just a hobby or recreational activity). Examples of a commercial activity include the exchange of
goods or services (i.e. the buying and selling of goods, and the provision of services including those
services that are not professional services), and agricultural, pastoral, horticultural, forestry, handicraft, or
fishing activities.

It is intended that an activity can come within paragraph (a) even if the activity is not a “trade” under the
Commercial Code (see Articles 6 – 9 of the Commercial Code), provided the activity is conducted for
profit. The requirement that the activity be conducted for profit means that subsistence activities (such as
subsistence agricultural activities) are not treated as a business. Because, unlike the stand of the code, as
long as the activity carried out systematically and tailored towards garner profit, such activity will be
considered as “business”

What is professional, vocational activity?

A “professional activity” involves the application of skill, based on theoretical knowledge usually
acquired through higher education, to the affairs of others to meet their needs. Common examples of
professions are legal practice, medical practice, dentistry, architecture practice, accountancy, pharmacy,
and optometry.

A “vocational activity” also involves the application of skill to the affairs of others to meet their needs.
The acquisition of a vocational skill may be through specialised training. The conduct of a trade skill,
such as a builder, electrician, or plumber, is an example of a vocational activity.

Though an employee renders professional/ vocation activities toward the employer he/she is excluded
from the definition of business because he is assimilated under income tax.

Para. B of ITP is in line with the “commercial code”

Paragraph (b) provides that “business” means any other activity recognised as a trade under the
Commercial Code. Article 5 of the Commercial Code lists activities that are treated as a trade. These
activities are automatically treated as a business for the purposes of the ITP.

It is noted that Article 5(2) of the Commercial Code refers only to rental of movable property and,
therefore, paragraph (b) does not apply to the rental of immovable property.

It should be noted that the exclusion of “rental” jobs applies only to movable property because under art.
5 (2) of excludes rental of “immovable” from the definition of “business”.
Paragraph (c) provides that “business” means any activity of a share company or private limited company
regardless of the objects of the company. This aligns with Article 10(2) of the Commercial Code. This
means that any activity undertaken by a share company or private limited company is a business.