Recent Tax Updates From Hong Kong And China

By Author: martin well
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With any international business expansion, it is very important that you do feasibility analysis. The issue of regulation, laws and the cost of opening and running your business will probably dictate whether you decide to go ahead or not. If you have already expanded to Hong Kong and China, then here are a few advance pricing guidelines and advance tax ruling system that you must keep in mind.

Hong Kong’s Advance Pricing Guidelines
Hong Kong’s Inland Revenue has released its long-awaited Advance Pricing Agreement guidelines, which will initially focus on negotiating bilateral and multilateral APAs specifically with jurisdictions with which Hong Kong has a Double Tax Agreement.

According to the Hong Kong APA guidelines, only resident and non-resident companies with a Permanent Establishment (PE) generating taxable income in Hong Kong can apply for an Advance pricing Agreement. Companies or PE’s which do not make taxable profits may not be eligible for the APA procedure which is aimed at reducing the risk of double taxation.

The APA procedure will require various documents to be submitted ...
... in stages defined below:
● The initial pre-filing
● Formal application
● Evaluation and analysis
● Negotiation and agreement
● Drafting , agreement and monitoring

China Authorities Explore Private Tax Ruling System
The Chinese tax authorities are considering proposals to implement an advance ruling system that would simplify tax administration and streamline procedures for filing taxes in the country.
The move could prove beneficial to multinationals that are currently grappling with China’s complex tax system.

The focus of the Advance Tax ruling (also referred to as Private Tax ruling) is improved taxpayer service by not only helping tax payers comply with the respective tax regulations, but also providing them tax related risk management advice.

Professional expertise to make it easy
In any international business expansion, it is very dangerous to assume that the basics of your local market will be duplicated in an overseas environment. Although there may be plenty of valuable information available, it is sensible to obtain professional support which could help you avoid significant problems and potential costs in the future. They have the required technical know-how to assist you in all the aspects of your business like HR, legal, sas compliance, international financial accounting, regulatory filings etc.

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