In Hong Kong, the Inland Revenue (Amendment) (No. 6) Bill 2017 (“Amendment Bill”) was gazetted on 29 December 2017. The objectives of the Amendment Bill are to codify into the domestic tax law the transfer pricing principles that were promulgated by the Organisation for Economic Co-operation and Development in its Base Erosion and Profit Shifting package.
The Amendment Bill seeks to counter the exploitation of gaps in tax rules by multinational enterprises to artificially shift profits to low or no-tax locations where there is little or no economic activity.
The Amendment Bill demonstrates that Hong Kong is committed to combat cross-border tax evasion. This is especially important for Hong Kong to preserve its competitiveness and reputation as an international financial and business centre.