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Hong Kong: Review of tax compliance changes for 2018/19

Hong Kong: Review of tax compliance changes for 2018/19

Taxpayers need to consider the number of recent tax changes in Hong Kong, given the looming tax compliance season for the 2018/19 year of assessment.

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The tax changes may present opportunities for taxpayers through various tax incentives, including the introduction of:

  • A two-tier profits tax regime
  • An enhanced tax deduction for research and development (R&D) expenditure
  • A tax deduction for capital expenses on three types of specified intellectual property (IP) rights
  • Changes to certain preferential tax regimes
  • Extending the profits tax exemption to onshore privately offered open-ended fund companies

The most significant change to Hong Kong tax law, however, is the introduction of a transfer pricing ordinance that formally codified transfer pricing rules and the three-tiered transfer pricing documentation requirement. An important requirement under the new transfer pricing rules is that certain Hong Kong companies will be subject to country-by-country (CbC) reporting requirements even when not the ultimate parent company of a taxpayer reporting group.
 

Read a March 2019 report prepared by the KPMG member firm in Hong Kong that summarizes these changes and related administrative measures for Hong Kong corporate taxpayers

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