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Hong Kong’s Responses to BEPS – Implications for the Territorial Profits Tax System

The Hong Kong Government has closely followed the development of the base erosion and profit shifting (“BEPS”) project undertaken by the Organisation for Economic Co-operation and Development (“OECD”) at the request of the G20. The BEPS project culminated in the publication of reports covering 15 distinct action points. As with most governments, Hong Kong has expressed broad support for the principles and concerns underlying the project and the direction of its proposals and recommendations. Nonetheless, as with many jurisdictions, it seems likely that Hong Kong will, at least in the foreseeable future, choose not to implement those proposals which are considered unnecessary in the current Hong Kong tax environment or which are inconsistent with the broad scheme of Hong Kong’s tax legislation.