Transfer pricing in Hong Kong

Transfer pricing is a term used to describe all aspects of intercompany pricing arrangements between related business entities, and commonly applies to intercompany transfers of tangible and intangible property.  Intercompany transactions across borders are growing rapidly and are becoming much more complex.  Global integration and new business practices challenge multinational corporations to find innovative transfer pricing solutions.
   
Stricter penalties, new documentation requirements, increased information exchange, improved training and specialisation are some of the tools used by tax authorities in this global "revenue race".

Strategic review

Through our expertise, we have created a set of transfer pricing strategies to assist you in achieving your global business objectives.  In order to improve net earnings and cash flow in the evolving global economy, companies can reduce costs and minimise risk by restructuring supply chains and international and domestic operating structures as they globalise.  PwC's Transfer Pricing Team can assist you in creating appropriate tax and legal structures to optimise your new operating configuration.  We have a strategy to help you achieve your goals and align your tax profile with your restructured value chain.  We do this by:

• optimising overall regional and global tax rates;
• creating a new and transformed income and cash flow stream;
• realigning structures in a more tax advantaged way eg. A regional principal structure with profits centralised in a tax advantaged jurisdiction;
• establishing potential synergies within your supply chain and operating structure;
• providing appropriate documentation for your restructured business processes listed above.

Dispute resolution

Many multi-national corporations have already implemented policies and methodologies for transfer pricing that have not yet been audited by the tax authorities.  Traditionally, the Inland Revenue Department in Hong Kong has not focused on this area, but in line with Revenue authorities in other jurisdictions in the region, more scrutiny is being paid to intra-group transfer prices.
    
As jurisdictions increase their scrutiny of transfer pricing, this trend will require that companies defend their transfer pricing strategies in the context of a transfer pricing examination.  Resolving transfer pricing disputes can be difficult because of the factual nature surrounding the transactions and the significant domestic and cross border tax implications.
   
PricewaterhouseCoopers has dispute resolution services that can help companies resolve their local or regional transfer pricing disputes and minimise their transfer pricing exposure in future periods.  Our team is a multi-disciplinary group and has experts in the field of law, economics, finance, tax, and accounting.  With the global reach of our services, PricewaterhouseCoopers can coordinate with transfer pricing professionals in jurisdictions worldwide to provide effective representation for our multi-national clients through all phases of controversy resolution.  We can also offer advice on the most effective strategy to pursue and provide tax advice, technical economics, and support in any forum including examination, administrative appeals, competent authority, advanced pricing agreements, or litigation.