On October 26, 2016 the Inland Revenue Department of the Hong Kong Special Administrative Region issued a press release announcing that on that same date the Hong Kong Government launched a public consultation gauge views on implementation of measures by the Organisation for Economic Co-operation and Development (OECD) to counter base erosion and profit shifting (BEPS) of enterprises.
The closing date for the consultation is December 31, 2016.
According to the press release Hong Kong will focus on the four minimum standards as well as measures of direct relevance to their implementation. The priority is to put in place the necessary legislative framework for transfer pricing rules which cover the latest guidance from the OECD, spontaneous exchange of information on tax rulings, CbC reporting requirement, the cross-border dispute resolution mechanism and the Multilateral Instrument.
The consultation paper issued in this respect discusses a.o. the following subjects:
· Overview of the BEPS Package
o What is BEPS?
o Components of the BEPS package
o Inclusive Framework for Implementation of the BEPS Package
o Review of Implementation of Minimum Standards
· Implementation strategy of Hong Kong
o Policy Intent
o Priorities for Hong Kong
o Remaining BEPS Actions
· Transfer Pricing Regulatory Regime
o Objective
o What is transfer pricing?
o Hong Kong’s current tax regime
o Transfer pricing rules
o Impact on business
o Penalty
o Advance pricing arrangement regime
· Transfer pricing documentation and CBC Reporting
o Objective
o A three-tier standardised approach
o Application of the documentation requirements
o Compliance issues
o Implementation issues of CbC Reporting
o OECD’s implementation and review plan
· Multilateral Instrument
o Objective
o Hong Kong’s intention to implement MLI
o Scope of MLI
o Tax treaty-related BEPS measures in MLI
o Prevention of Treaty Abuse
o Implementation of MLI in Hong Kong
· Other related matters
o Dispute Resolution Mechanism
§ Objective
§ Hong Kong’s current position
§ OECD’s requirements
§ Proposed features
§ OECD’s implementation and review plan
o Spontaneous EOI on Tax Ruling
§ Objective
§ Scope of tax ruling to be exchanged
§ OECD’s implementation and review plan
o Double Taxation Relief
§ Objective
§ Proposed enhancement to the tax credit system
Click here to be forwarded to the Consultation Paper on measures to counter Base Erosion & Profit Shifting as available on the website of the Financial Services and the Treasury Bureau.
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