HONG KONG: OECD/G20 BEPS Package Introduction

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The Hong Kong Government’s new policy paper includes details of the introduction of the OECD/G20 Base Erosion Profit Shifting (BEPS) Package. Back in June 2016, Hong Kong showed its responsibility to the BEPS package to the OECD, due to Hong Kong being a global financial centre.
Moreover, the paper hints that an amendment bill referring to country-to-country reporting, dispute resolution and transfer pricing will be presented to the Legislative Council by the end of 2017.
The paper suggests for a considerable expansion of the previous transfer pricing code, which now permits changes of profits/losses of an entity where arm’s-length pricing would have resulted in a different level of tax.
The OECD’s main objective is to control the start of the 4 minimum standards for example, tackling damaging tax processes (Action 5) and initiating the cross-border dispute settlement system (Action 14). Moreover, the OECD wants to avoid treaty abuse (Action 6) and develop the country-by-country (CbC) reporting stipulation (Action 13).