Lack of transfer pricing rules leads to questionable audits in Hong Kong
January 08, 2015
Despite a self-touted reputation as a leading global financial centre, Hong Kong’s Inland Revenue Department (IRD) has been criticised by tax practitioners for overly aggressive audits on asset managers. Hong Kong has limited transfer pricing legislation and often seeks to enforce arm’s-length pricing through practice notes and a network of tax treaties.
Travis Benjamin, head of tax at Deacons law firm, said that the IRD has been launching aggressive audits attacking the structure of asset management companies and their related offshore parties. Benjamin says that the fee arrangements and pricing models of asset managers are coming under scrutiny.
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