Inland Revenue (Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting) Order (Cap. 112DQ) (Version Date: 09/02/2023)

Following the enactment of the „Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion & Profit Shifting (BEPS)“ in Hong Kong in December 2022, the local government has now published a revised (consolidated) version of the Inland Revenue (Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting) Order on Hong Kong e-Legislation, the official website for publicizing legal documents.
The revised version contains amendments in the following two sections:
1. The main body of the order containing all regulatory provisions and
2. Schedule 1 setting out the BEPS agreement
To recall, the order implements provisions as regards
– „hybrid mismatches“ that is profit shifting transactions that induce a tax advantage, according to the definition of the Organisation for Economic Co-operation & Development (OECD);
– treaty abuse;
– the avoidance of gaining „permanent establishment status“ for purposes of circumventing tax laws of Hong Kong; and
– issues pertaining to dispute resolutions concerning affected firms and authorities of the jurisdictions covered by a tax agreement.