On December 29, 2017, the Inland Revenue (Amendment) (No. 6) Bill 2017 (Amendment Bill) was published in the Official Gazette. With the Amendment Bill, the Hong Kong Government intends to codify the transfer pricing principles into the Inland Revenue Ordinance (Cap. 112) (IRO) and implement the minimum standards of the Base Erosion and Profit Shifting (BEPS) package published by the OECD.
Hong Kong indicated its commitment to implementing the BEPS package in 2016 June, and consulted the public during October 26, 2016 to December 31, 2016 on oncoming measures, including the implementation of four minimum standards under BEPS Project and the inclusion of transfer pricing rules into IRO. "We will ensure that the international tax standards are met whilst upholding our simple and low tax regime. We will also seek to minimise the compliance burden on businesses, particularly small and medium enterprises, and implement the changes in a progressive manner. Our consultation exercise conducted in late 2016 revealed broad support for this implementation strategy," according to a government spokesman.
The Amendment Bill also includes revision to the IRO to ensure that certain beneficial measures are in compliance with the fair tax requirements by the OECD and EU. The Amendment Bill will be introduced into the Legislative Council on January 10, 2018.
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