The Inland Revenue Department ("IRD") of Hong Kong has
introduced a Country-by-Country Reporting ("CbCR")
framework, effective for financial years starting on January 1,
2018 ("first filing period").
Multinational Enterprises ("MNEs") with an entity in Hong
Kong that meet the prescribed financial thresholds are required to
submit a notification to the IRD disclosing details on the filing
of the group CbCR. The notifications are required to be filed with
the IRD within three months of the financial year end. For the
first filing period, the due date for notifications was extended
from March 31, 2019 to May 15, 2019. This has been welcomed by
taxpayers that need the additional time to identify and organize
their global and Hong Kong CbCR obligations.
Consistent with the OECD framework, the IRD will also be
participating in automatic exchange mechanisms designed to
facilitate the exchange of CbCRs between countries. The
Multilateral Competent Authority Agreement on the Exchange of
Country by Country Reports ("MCAA") has been designated
as the primary platform for Hong Kong to exchange CbCRs with other
countries. As the MCAA entered into force in Hong Kong on September
1, 2018, these exchange relationships will not be active during the
first filing period and will only be available for periods starting
on or after January 1, 2019, limiting Hong Kong's ability to
exchange CbCRs during the first filing period. Instead, the Hong
Kong IRD will only be able to exchange CbCRs with the following
existing bilateral treaty partners: France, Guernsey, Ireland,
Japan, Jersey, Republic of Korea, Malta, Netherlands, New Zealand,
South Africa and the United Kingdom.
Importantly, Hong Kong taxpayers that are part of an MNE with a
CbCR obligation that have not made a primary or surrogate lodgment
in one of the 11 countries above, will be required to submit the
CbCR in Hong Kong for the first filing period by December 31,
2019.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.