Hong Kong tax audit

Recent tax issues being queried by IRD

  • Macau offshore company - Peak review year for IRD
  • Depreciation allowance on plant and machinery used outside Hong Kong under section 39E
  • Related party transactions
  • Transfer pricing issues
  • Royalties
  • Management / consultancy fee
  • Hong Kong branch of overseas head office
  • Investment fund

If a tax audit file is opened, the IRD will follow the below review cycle before they can conclude the case.

 

Review cycle of a tax audit

 

 

 

 

Our services

Tax investigation / field audit

  • Advise client on the general procedures and implication of an IRD tax audit
  • Minimise disruption to the client's business activities during the tax audit
  • Conduct a pre-audit review to identify potential problem areas
  • Formulate a strategy to handle the IRD tax audit with a view to minimize client tax and penalty exposures
  • Accompany the client to attend IRD interview and liaise with the case officer thereafter
  • Assist in the preparation and submission of a settlement proposal for discussion with the IRD
  • Assist in the preparation and submission of a representation on penalty to the IRD

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Voluntary disclosure (opportunity for reduced penalty)

  • Review the client's taxation affairs
  • Advise the client on the potential areas of concern
  • Assist the client to compile an appropriate proposal to the IRD
  • Assist in the preparation and submission of a representation on penalty to the IRD

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Field audit - anti tax avoidance

  • Advise client on the general procedures and implication of an IRD tax audit
  • Minimise disruption to the client's business activities during the tax audit
  • Conduct an independent review of the client's existing planning arrangements; evaluate the implementation status of such plans; identify potential issues and problem areas; assess the position including a review of the technical arguments and mitigating factors
  • Provide technical support for audit defence
  • Formulate a strategy to handle the IRD tax audit
  • Accompany the client to attend IRD interview and liaise with the case officer thereafter
  • Prepare and submit the case for acceptance of the current arrangement or a settlement proposal
  • Monitor and follow up on the resolution of the case

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Health check

Prevention is better than cure

  • Conduct review on the client's operation by reference to the prevailing tax legislation; interpretation and practice notes of the IRD
  • Assist the client to establish a systematic approach towards determination of inter company pricing and other charges
  • Assist the client to perform a follow up operation review
  • Identify the possible tax exposures and the remedial actions to be adopted

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Other services

  • Advise on the set up and maintenance of a proper accounting system
  • Advise on an appropriate and tax efficient structure (corporate and personal)

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Contact us

Kenneth Wong
Partner
Tel: +[852] 2289 3822
Email

David Smith
Senior Advisor
Tel: +[852] 2289 5802
Email

Philip Hung
Director
Tel: +[852] 2289 3130
Email

Angela Ho
Associate Director
Tel: +[852] 2289 3860
Email

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