HONG KONG: Gazettes BEPS, Profits Tax Bills.

Hong Kong published two bills in its Official Gazette on December 29 to introduce provisions to counter base erosion and profit shifting and to alter its business tax regime, reports Tax-News.com.

The bills are to be tabled before the Legislative Council on January 10, 2018, and must pass through three readings before they will be enacted.

The base erosion and profit shifting (BEPS) changes will involve an update to the territory's transfer pricing framework and the implementation of the BEPS minimum standards. In implementing the minimum standards, agreed as part of the OECD's BEPS project, territories agree to remove any harmful tax provisions from their domestic tax regimes, amend their tax treaty rules to prevent treaty abuse, implement country-by-country reporting rules and exchange these reports with other countries, and work together to improve cross-border tax dispute resolution mechanisms.

The changes to the profits tax regime provided in the second bill will involve a cut to the profits tax rate for the first HKD2m (USD256,000) of profits of corporations to 8.25 percent. Profits above that amount will continue to be subject to the tax rate of 16.5 percent. For unincorporated businesses which are mostly partnerships and sole proprietorships, the two-tiered tax rates will correspondingly be set at 7.5 percent and 15 percent. A tax-paying corporation or unincorporated business may save up to HKD165,000 and HKD150,000 each year, respectively, the Government says.

Source: Tax-News.com






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