Hong Kong Releases New Guidance On Advance Rulings

by Mary Swire, Tax-News.com, Hong Kong

01 May 2020

Hong Kong has updated its guidance on advance rulings, to reflect changes to Hong Kong's practices as a result of its efforts to comply with the OECD's minimum standards proposed as part of the base erosion and profit shifting (BEPS) Action Plan.

Hong Kong offers specific rulings, advance tax rulings, advance pricing arrangements, and general rulings. The new guidance, which replaces guidance from 2011, notes that, in line with Hong Kong's commitments to implement the BEPS minimum standards, the territory has committed to spontaneously exchange, with other territories' competent authorities, information on the tax rulings it grants where they could give rise to BEPS concerns.

Hong Kong will exchange information on the following types of rulings:

• rulings relating to preferential regimes;
• unilateral APAs or other cross-border unilateral rulings in respect of transfer pricing;
• permanent establishment rulings; and
• related party conduit rulings.

The guidance explains how taxpayers can apply for rulings and the process that is followed by the tax authorities when considering an application. It sets out the fees that must be paid and the documentation that must be provided. It concludes by discussing the effects of a ruling and other miscellaneous issues, such as the withdrawal of a ruling and post-implementation reviews.

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