Hong Kong is one of the latest tax jurisdictions to codify its own transfer pricing law, with 2020 being the first year for some Hong Kong corporations to prepare transfer pricing documentation.
Renowned for being one of the lowest tax rate jurisdictions, and for its conductive business environment, Hong Kong is a place in which multinational corporations (MNCs) tend to allocate more profits in order to lower the overall group effective tax rate. The Hong Kong Inland Revenue Department (IRD) definitely welcomes this. However, with the adoption of Automatic Exchange of Information (AEOI), tax filings submitted to the IRD may be shared with other tax authorities. As such, the transfer pricing policies of MNCs must balance the interests of all relevant tax authorities, not limited to the IRD.
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