Hong Kong Transfer Pricing — Recent Developments And Deadlines

Further to the implementation of the three-tier transfer pricing ("TP") documentation rules in Hong Kong, many multinational enterprises ("MNEs") are working with their TP specialists to fulfil the relevant obligations. Recently, the Hong Kong Inland Revenue Department ("IRD") is performing TP review on certain entities with the financial year ended 31 March 2019, and may roll out its review on a broader range of taxpayers in a reasonable timeframe.

In brief, if a sizable Hong Kong entity of a MNE group carries out a substantial level of related party transactions, it could be mandatorily required to prepare Master File and Local File documentation if it does not satisfy the exemption criteria (please refer to Appendix 1 for details on the exemption criteria).