Hong Kong Country-by-Country Reporting Notification Requirements

Hong Kong introduced a transfer pricing regime and related documentation requirements (refer to our 3rd Quarter 2018 issue for more details). Included therein is the Country-by-Country (CbC) reporting and notification requirements. The first CbC notification due date is 31 March 2019. 

In Hong Kong, the Inland Revenue (Amendment) (No. 6) Ordinance 2018 provides a legislative framework for Hong Kong to implement the CbC reporting. 

The requirements for CbC reporting only apply to a multinational enterprise group (MNE Group) whose annual consolidated group revenue reaches the specified threshold amount, i.e. HK$6.8 billion (Reportable Group). 

In respect of a Reportable Group, the primary obligation of filing a CbC Return is on the ultimate parent entity (UPE) resident in Hong Kong (HK UPE) and not on any other constituent entitiesresident in Hong Kong (Hong Kong Entities). The HK UPE is required to file a CbC Return for each accounting period beginning on or after 1 January 2018. The HK UPE may also voluntarily file a CbC Return for an accounting period beginning between 1 January 2016 and 31 December 2017. 

A Hong Kong Entity of a Reportable Group whose UPE is not resident in Hong Kong is subject to a secondary obligation of filing a CbC Return if certain conditions are met. 

The Reportable Group is required to make a notification containing information relevant for determining the obligation for filing a CbC Return within 3 months after the end of the relevant accounting period. Hence, for groups with financial year end of December, the first notification deadline is 31 March 2019. 

The deadline for filing a CbC Return is 12 months after the end of the relevant accounting period or the date specified in the assessor’s notice, whichever is the earlier. 

Penalties are provided in respect of matters such as failing to file CbC Returns and/ or notifications.

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