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Henry H N Fung

Tax Partner


Transfer Pricing Documentation Standards in 2018 - Hong Kong Updates

Currently, the Hong Kong Inland Revenue Ordinance ("IRO") does not contain any specific transfer pricing (“TP”) rules or legislation addressing non-arm’s length transactions between associated enterprises. As such, the Hong Kong Inland Revenue Department ("IRD") has been relying on a number of general provisions stipulated in the IRO, non-legally binding IRD’s Departmental Interpretation and Practice Notes (“DIPN”) as well as case law to deal with TP issues.

As far as TP documentation is concerned, the Consultation Paper proposes to introduce comprehensive TP legislation under which new TP documentation requirements in Hong Kong based on the OECD’s three-tiered standardized approach (i.e. mater file, local file and CbC report) will be put in place upon the enactment of the relevant legislation.  

On 31 July 2017, the Hong Kong Government released its Consultation Report on the measures to codify the minimum standards of BEPS into the domestic legislation in response to the Consultation Paper dated 26 October 2016. Although the relevant laws have not yet been enacted and no detailed guidelines have yet been published, it is widely expected that the new TP rules or legislation will come into effect by the end of 2017 or in early 2018. Thus, MNEs are recommended to review their operating structures and TP compliance status to cope with the new requirements.

Please download the summaries of the updates of Hong Kong Transfer Pricing Documentation Standards in 2018.


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