What's New

DIPN 58 – Transfer Pricing Documentation and Country-by-Country Reports  
DIPN 59 – Transfer Pricing Between Associated Persons  
DIPN 60 – Attribution of Profits to Permanent Establishments in Hong Kong  

The Inland Revenue (Amendment) (No. 6) Ordinance 2018 has codified the transfer pricing rules and documentation requirements. Departmental Interpretation and Practice Notes Nos. 58, 59 and 60 have been issued to set out the Department’s interpretation and practice on the relevant rules and requirements, and the latest international standards relating to transfer pricing.

Transactions between associated persons or non-Hong Kong resident persons’ permanent establishments in Hong Kong, to which the transfer pricing-related provisions in the Inland Revenue (Amendment) (No. 6) Ordinance 2018 do not apply, should be dealt with in accordance with Departmental Interpretation and Practice Notes Nos. 45 and 46.

Departmental Interpretation and Practice Notes No. 28 has been updated to set out the Department’s interpretation and practice on the provisions relating to foreign tax deduction after the enactment of the Inland Revenue (Amendment) (No. 6) Ordinance 2018.

Stamp Duty statistics (SSD / BSD / DSD) have been uploaded to the Department’s website.

Stamp Duty statistics (SSD / BSD / DSD) have been uploaded to the Department’s website.

The Inland Revenue Department has achieved all the targets, and exceeded many, in its performance pledges in 2018-19.  The Performance Pledge Annual Report 2018-19 has been uploaded to the Department’s website.

The Departmental Interpretation and Practice Notes No. 23 (Revised) (“Recognized Retirement Schemes”) has been updated to reflect changes brought about by various legislative amendments concerning MPF schemes; and set out the Department’s revised assessing practice relating to defined benefit schemes.

Stamp Duty statistics (SSD / BSD / DSD) have been uploaded to the Department’s website.

Starting from the year of assessment 2019/20, taxpayers can claim deduction for (a) qualifying premiums paid under Voluntary Health Insurance Scheme (VHIS) policies; and (b) qualifying annuity premiums paid under qualifying deferred annuity policies and tax deductible MPF voluntary contributions (TVC) paid.  The following two Departmental Interpretation and Practice Notes are issued today to explain the conditions for deduction of the premiums/ contributions paid and the Department’s interpretation and practices on the provisions relating to the new concessionary deductions:

(1) Departmental Interpretation and Practice Notes No. 56  - Concessionary Deductions: Sections 26H to 26M Health Insurance Premiums; and

(2) Departmental Interpretation and Practice Notes No. 57  - Concessionary Deductions: Sections 26N to 26U Annuity Premiums and MPF Voluntary Contributions.

Starting from the year of assessment 2018/19, capital expenditure incurred for procuring environmental protection installation is deducted in full in one year instead of over five years. The Departmental Interpretation and Practice Notes No. 5 (Revised) has been updated to set out the Department’s interpretation and practice on the provisions relating to the accelerated tax deduction. The part relating to tax deduction for research and development (“R&D”) expenditure is covered in the Departmental Interpretation and Practice Notes No. 55. 

Taxpayers can claim enhanced tax deduction for R&D expenditure incurred on or after 1 April 2018 in respect of qualifying R&D activities. The Departmental Interpretation and Practice Notes No. 55  explains how a taxpayer can be entitled to the 100% tax deduction or enhanced tax deduction for R&D expenditure.

Stamp Duty statistics (SSD / BSD / DSD) have been uploaded to the Department’s website.