This is certainly a positive step, as it gives our clients the security they sorely need for its new TP policy, while demonstrating the IRD`s commitment to implementing a TP regime in Hong Kong that is in line with global tax developments. It also gives taxpayers assurance that the IRD is open to a unilateral APA. Subjects may consider entering into unilateral APAs with the IRD in cases where a double taxation agreement is not applicable or as an alternative to the multilateral APA, where transactions with related parties involve many jurisdictions. Finding an APA remains one of the best options to avoid conflicts in the future and allow taxpayers to focus on their business development in a highly competitive business environment. We look forward to the IRD closing other APAs in the near future. ADVANCE Pricing Agreements are a cooperative approach to compliance with transfer pricing. They result in considerable time and cost savings and security of results for tax administrations and multinational companies in relation to conflicting controls. APAs encourage advance compliance for taxpayers and early resolution of potential disputes. A pre-price agreement (APA) is an agreement that sets an appropriate rate of criteria ahead of controlled transactions to determine the transfer prices of these transactions over a specified period of time.
It is an instrument for multinationals that manage and reduce transfer pricing risk on a forward-looking basis. National legislation authorizes the issuance of a unilateral APA in the form of a binding decision, and bilateral or multilateral APAs may be concluded in accordance with New Zealand`s double taxation conventions. We have gradually developed this activity as the ultimate solution for complex cases with difficult facts and circumstances. The product is particularly suited to material asset issues, which can give rise to a wide variety of opinions on pricing. Our inventory of the APA can be summed up as follows. 7. What should the taxpayer do if he is unable to meet the critical assumptions of the APA agreement under the Covid 19 effect? Once the review is complete, we will meet with the heads of the other jurisdiction (bilateral APA) or with you (unilateral APA) to discuss disagreements and findings. While awaiting agreement, additional information and views may be exchanged.
In the case of bilateral APAs, we strive to stay in touch with the subject throughout the process to ensure that the outcome agreed between the tax authorities also meets the objectives of the subject. On July 15, 2020, the Inland Revenue Department (IRD) released the revised Interpretation and Practice Notes Department No. 48 (Revised DIPN 48). The revision (click here) is essentially intended to reflect legislative changes to the 2018 Regulation 2018 on the Legal Advance Price Regime (APA) in Hong Kong; and (b) to explain the rationality of the APP process. Following the pre-nomination meeting, the APP application is formalized and submitted for review.