A bill—the Inland Revenue (Amendment) (No. 6) Bill 2017—was gazetted on 29 December 2017, proposing a mandatory transfer pricing regime and anti-base erosion and profit shifting (BEPS) changes to Hong Kong tax law.
The BEPS bill marks a significant step in Hong Kong’s transfer pricing enforcement regime. On the basis of the arm’s length principle, the Hong Kong government proposes fundamental transfer pricing rules that would authorize the Inland Revenue Department to adjust the profits or losses of an enterprise when the actual transaction between two related persons departs from a transaction that would have been made between independent persons, and the transaction created a “tax advantage.”
The introduction of the mandatory documentation requirements is based on the three-tiered approach of country-by-country (CbC) reporting, Master file, and Local file measures. The BEPS bill also provides details concerning an advance pricing arrangement (APA) programme and other related provisions.
Read a December 2017 report prepared by the KPMG member firm in Hong Kong
© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.