Hong Kong Transfer pricing Services

Transfer pricing is the area that concerns the most under multinational businesses.

In the Hong Kong or Mainland, the corporation tax self-assessment regime for transfer pricing makes the taxpayer responsible for verifying 'arm's length' prices on all related-party transactions.

The Tax authority of Hong Kong or Mainland imposes interest and penalties for non-compliance, even if international business company has made losses. So it's vital their business manages its transfer pricing obligations effectively. International Tax (HK) are here to help them do just that.

 

Managing your transfer pricing locally and globally

International Tax (HK) can access tailored solutions, from transfer pricing reviews and planning structures when going overseas for the first time, to business restructuring and profit attribution to permanent establishments.

International business will work with Hong Kong and China team of transfer pricing and international tax specialists, accountants, and economists. You can also receive support from over 150 transfer pricing specialists via our global network of member firms. This collaborative approach brings you integrated, pragmatic and effective global transfer pricing solutions and advice.

International Tax (HK) Co. Ltd. transfer pricing framework will help International business overcome increasingly sophisticated challenges and deliver relevant and sustainable transfer pricing services. The BEPS agenda focuses on coherence, substance, and transparency, all of which have a transfer pricing impact.

The approximation of the arm’s length price of International Tax (HK) Co. Ltd. is dependent on the availability and reliability of comparable. When processing the transfer pricing analysis, the following factors should be considered during the determination of the internal and external comparability transactions:

  • characteristics of the property or service,
  • functional analysis (functions, assets and risks),
  • contractual terms,
  • market conditions (economic circumstances), and
  • business strategies.

 

International Tax (HK) Co. Ltd.’s comparability analysis has the following four steps:

  • identifying intra-group transactions subject to analysis;
  • performing an analysis of the controlled transaction(s) under examination, with emphasis on functional analysis;
  • establishing the proper transfer pricing method; and
  • determining the transfer price.

 

Availability of benchmarking/comparative data

The search of consisted of: International Tax (HK) Co. Ltd. (i) the electronic identification of a sample of companies, which activities are involved in provision of comparable services and (ii) validation of the potentially comparable companies identified through additional research through global company database from Bureau van Dijk(BvD);

Bureau van Dijk is a major publisher of business information, and specializes in private company data combined with software for searching and analyzing companies. It is a Moody's Analytics company. Orbis is Bureau van Dijk's flagship company database.

The tax authorities generally require the use of Chinese comparable companies (listed on the Shanghai and Shenzhen stock markets) but may also accept foreign comparable companies if necessary. In Circular Guo Shui Han [2005] No. 239, the tax authorities state that tax authorities could use as a possible resource the Bureau van Dijk BvD Osiris database during a transfer pricing audit. Based on the implementation regulations, the tax authorities may use both public and nonpublic information to analyze whether related-party transactions conform to the arm’s length principle. Bureau van Dijk's Osiris database, and. Standard and Poor's Research Insight database. Both databases are used by the mainland Chinese and Hong Kong tax authorities

 

Internal comparative analysis:

 

 

Benchmark Study through global company database from Bureau van Dijk:

 

 

External comparative analysis :

 

 

Supply chain management analysis: