On 4 July 2018, the legislative Council passed the third and final reading of the Inland Revenue (Amendment) (no.6) Bill 2017 which brings the following amendments to:
- Require documentation relating to transactions for intercompany transactions;
- Codify rules on transfer pricing;
- Require income or loss from provision between associated persons to be computed for tax purposes on an arm’s length basis.
The terms required for preparation of the master file, local file and Country by Country file should be completed by December 31, 2019, with the end date of the year from January 1 to March 31 and September 30, 2020 with the end date of December 1 to December 31 and 9 months after the end of the reporting year from April 1 to November 30.
Let us remember that earlier, on 24 May 2018, Hong Kong signed a comprehensive avoidance of double taxation agreement (CDTA) with Finland. Finland became the first Nordic jurisdiction with which Hong Kong has signed CDTA. Thus, the number of jurisdictions with which Hong Kong has signed CDTAs reached up to 40. The CDTA with Finland contains several favorable provisions that are expected to promote closer economic and trade links between Hong Kong and Finland. This alert contains a summary of the main points of the provisions of the CDTA that apply to Hong Kong residents.
