On 26 October 2016, the HKSAR Government launched a public consultation on implementing measures to counter BEPS in Hong Kong. The BEPS consultation paper issued by the HKSAR Government indicates that it will focus on the four minimum standards for implementing the BEPS package identified by the OECD and measures that are of direct relevance to their implementation. The HKSAR Government has set out in the consultation paper proposals related to the following priority areas: (1) transfer pricing (TP) regulatory regime; (2) TP documentation and country-by-country reporting; (3) anti-treaty abuse rules in CDTAs; (4) multilateral instrument; and (5) other related matters, namely a statutory cross-border dispute resolution mechanism, spontaneous exchange of information on tax rulings and enhancement to the tax credit system.
The BEPS consultation launched by the HKSAR Government signifies the start of the potentially long and ongoing journey for Hong Kong to implement the OECD's BEPS package and align its tax system with the latest international tax standards. Multinational enterprise groups should definitely be assessing the potential impact of the proposals in the BEPS consultation paper on their existing holding structures and business operations as well as their present planned wider BEPS responses outside Hong Kong, and stay tuned of the upcoming legislation in both TP and other non-TP areas.