Hong Kong: New Transfer Pricing Laws

The Hong Kong government passed legislation to implement a base erosion and profit shifting (BEPS) and transfer pricing tax regulatory regime. As a result, Hong Kong now mandates the use of the arm’s-length principle in the pricing of intra-group cross-border transactions and allows tax authorities to make appropriate adjustments when the principle hasn’t been followed.

Hong Kong has also adopted the OECD’s country-by-country report (CbCR), master file and local file documentation requirements.

Multinational groups with entities in Hong Kong should review their cross-border arrangements in light of the new legislation.