Hong Kong revises guidance on advance tax rulings

April 29, 2020 Asia-Pacific, Featured News, Hong Kong, Transfer Pricing
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By Agnes Lo, Associate Professor of Teaching, Lingnan University, Hong Kong & Raymond Wong, Associate Dean, City University of Hong Kong

Hong Kong’s Inland Revenue Department, on 16 April, published revised guidance setting out the Hong Kong government’s interpretation and practice relating to advance tax rulings.

The revised guidance, Departmental Interpretation and Practice Notes (DIPN) No. 31 follows the enactment of the Inland Revenue (Amendment) (No. 6) Ordinance 2018. It replaces guidance issued in 2011.

DIPN No. 31 updates the fees for applying advancing tax rulings. Details of the application fees can be found in Appendix 8.

DIPN No. 31 also provides new guidance on the exchange of information. To implement the minimum standards of the OECD/G20 base erosion and profit shifting (BEPS) package (including the spontaneous exchange of tax rulings), DIPN No. 31 specifies that Hong Kong’s tax authority will exchange rulings relating to preferential regimes, unilateral advance pricing arrangements or other cross-border unilateral rulings in respect of transfer pricing, permanent establishment rulings, and related party conduit rulings.

All the above categorized rulings issued on or after 1 April 2016 are required to be exchanged within three months of the date received by a competent authority.

Rulings exchanged will be protected under the tax confidentiality provisions in the relevant tax treaty or convention.

Appendix 9 of the revised DIPN No. 31 summarizes the jurisdictions with which rulings should be exchanged.

The full version of the DIPN No. 31 can be found at the following link: DIPN31 (Revised).

Agnes W.Y. Lo

Agnes W.Y. Lo

Associate Professor at Lingnan University, Hong Kong

Professor Lo has been a faculty member at Lingnan University for more than 15 years.

She mainly teaches Taxation that covers a wide range of topics including international tax planning, transfer pricing, and tax policy and its relevance to society. Her primary research areas include corporate governance and disclosure, and tax avoidance in general and avoidance through transfer pricing in particular.

Professor Lo co-authored a book entitled “International Transfer Pricing in China: Post WTO”, the content of which was used as training materials for the HKICPA workshops.

She has also published her work in the mainstream accounting journals including The Journal of the American Taxation Association, Journal of Corporate Finance, Journal of Accounting and Public Policy, International Tax Journal, etc.

Agnes W.Y. Lo
Dr. Raymond M. K. Wong

Dr. Raymond M. K. Wong

Associate Dean, College of Business; Associate Professor, Department of Accountancy at City University of Hong Kong

Dr. Raymond Wong currently serves as Associate Dean (Undergraduate Programmes) of the College of Business at City University of Hong Kong. During his tenure in City University of Hong Kong, he has taken up various executive roles and has been contributing tremendously to the Department’s undergraduate education program.

He obtained substantial experiences in handling academic and administrative issues related to teaching and learning, globalization in accounting education, and knowledge transfers. One of his primary research interests is about taxation, with particular focus on reporting of related-party transactions and transfer pricing issues in China.

His research also covers accounting and auditing issues in China and his work appeared in several leading accounting and finance journals.

Dr. Raymond M. K. Wong

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