Hong Kong Updates- Proposed New Stock Exchange/ Tax/ BEPS/ Arbitration/ Employment

Proposed New Stock Exchange

A public consultation on a potential new board has been announced by the Stock Exchange of Hong Kong. This board would (likely) cover:

(a) "pre-profit" companies;

(b) companies with non-standard governance procedures; and

(c) Mainland Chinese companies wishing to secondarily list in Hong Kong.

Tax

In a recent IRD Board of Review case, it was held that trading profits derived by a Hong Kong company under an import processing arrangement with its wholly owned subsidiary were of “Hong Kong source” and therefore taxable in Hong Kong. The Board further decided that, in the absence of a primary transfer pricing adjustment made by a tax treaty partner, no unilateral adjustment could be made (to reduce the taxpayer's Kong sourced profits).

BEPS

Hong Kong, represented by China, signed the multilateral (67 country) OECD BEPS convention (to prevent Base Erosion and Profit Shifting).

Arbitration

The automatic opt-in applicable to domestic arbitration under the Arbitration Ordinance expired on 1st June, 2017.

Employment

Hong Kong's Chief outgoing Executive announced a framework towards regulating standard working hours. The proposals include:

• requiring that employers put in place a written employment contract, which must include the employee's working hours and overtime remuneration arrangements, for employees with a monthly wage of HK$11,000 or below, and
• mandating the overtime remuneration for such employees.

However, with a new Chief Executive, this and other proposals (such as ending the clawback of employers' contributions from employees' MPF funds) are put on the back burner.

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Primasia will post the updates of Hong Kong and China from time to time. Follow us on our Website/ Blogger/ LinkedIn and stay tunned for our updates!

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John Barclay -Email

Teresa Tam - Email 

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