On 19 July 2019, the Hong Kong Inland Revenue Department (IRD) published the three “Departmental Interpretation and Practice Notes” (DIPNs) Nos. 58, 59 and 60. The notes have been issued to set out the Department’s interpretation and practice on the relevant rules and requirements, and the latest international standards relating to transfer pricing.
DIPN 58 covers the three-tiered structure including local file, master file and CbC reporting requirements of transfer pricing documentation that was implemented as part of the Inland Revenue (Amendment) (No. 6) Ordinance 2018. Local and Master file requirements apply in relation to accounting periods beginning on or after 1 April 2018, and CbC reporting requirements, which apply in relation to accounting periods beginning on or after 1 January 2018. The requirements are consistent with the OECD’s three-tiered standardized approach.
DIPN 59 provides an overview of new transfer pricing rules which generally apply for transactions entered into or effected on or after 13 July 2018. DIPN 60 provides an overview of Hong Kong’s attribution rules, which apply in relation to a year of assessment beginning on or after 1 April 2019.
