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Inland Revenue (Amendment) (No. 6) Ordinance 2018 - Key Elements and Effective Dates

The Inland Revenue (Amendment) (No. 6) Ordinance 2018 (“the Amendment Ordinance”) was gazetted on 13 July 2018.

The main objectives of the Amendment Bill are to codify the transfer pricing principles, implement certain measures under the Base Erosion and Profit Shifting (BEPS) package and align the provisions in the Inland Revenue Ordinance (Cap. 112) with international tax requirements.

The key elements of the Amendment Ordinance are summarized as follows:

Key Element

Effective Date

Enhancements to double taxation relief provisions

Apply to tax payable for a year of assessment beginning on or after 1 April 2018

Transfer pricing rules and related provisions

  • Apply to a year of assessment beginning on or after 1 April 2018 for arm’s length principle, advance pricing arrangement and changes in trading stock
  • Apply to a year of assessment beginning on or 1 April 2019 for separate enterprise principle and taxation of income from intellectual property accrued to non-Hong Kong resident associates
  • Grandfathering of transactions effected or income accrued before 13 July 2018

TP documentation requirements relating to master file, local file and country-by- country (“CbC”) report

  • Apply to an accounting period beginning on or after 1 January 2018 for CbC report
  • Apply to an accounting period beginning on or after 1 April 2018 for master file and local file
  • Voluntary filing of CbC report allowed for an accounting period beginning in 2016 or 2017

Amendments to preferential regimes, including extension of tax concession to domestic transactions and prescription of thresholds for substantial activities requirements

  • Apply to tax payable for a year of assessment beginning on or after 1 April 2018
  • Threshold requirements will be prescribed after consulting the relevant stakeholders

The Inland Revenue Department will promulgate guidance to facilitate taxpayer’s understanding of the requirements under the Amendment Ordinance in due course.

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