Based on the overall feedback from the public, there has been overwhelming support to codify transfer pricing into Hong Kong law.
The current plan is for the relevant amendment bill to be introduced into the Legislative Council by the end of 2017, whilst the legislation relating to multilateral instrument will be introduced by mid-2018.
There has been a positive development to the exemption thresholds for the preparation of master and local files – they are now two-folded based on: (i) size of business; and (ii) related party transaction amount. The relaxing of the thresholds helps to reduce the compliance burden for taxpayers.
Domestic transactions will continue be included in the scope of the amendment bill.
Further clarifications on intellectual property, penalties, advance pricing arrangements, multilateral instruments, etc. are also included in the Consultation Report.