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Transfer pricing ▸ New transfer pricing rule in Hong Kong ⚫ Transfer Pricing Rule 1: s.50AAF • To apply arm's length principle for transactions between associated persons for sale / transfer / use of assets and provision of services ⚫ If the 4 conditions under s.50AAF are satisfied so that the transaction is not carried out in an arm's length basis, the IRD can adjust the P&L of the taxpayer as if the transaction is carried out under arm's length basis ⚫ Transfer Pricing Rule 2: s.50AAK • • To apply separate enterprise principle to treat HK PE of non- resident person as a separate entity ⚫ The income or loss of the HK PE is calculated as if it is carrying on business based on an arm's length basis 78

Transfer pricing ▸ New transfer pricing rule in Hong Kong ⚫ Transfer Pricing Rule 1: s.50AAF • To apply arm's length principle for transactions between associated persons for sale / transfer / use of assets and provision of services ⚫ If the 4 conditions under s.50AAF are satisfied so that the transaction is not carried out in an arm's length basis, the IRD can adjust the P&L of the taxpayer as if the transaction is carried out under arm's length basis ⚫ Transfer Pricing Rule 2: s.50AAK • • To apply separate enterprise principle to treat HK PE of non- resident person as a separate entity ⚫ The income or loss of the HK PE is calculated as if it is carrying on business based on an arm's length basis 78

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Can you exlain the below slide? It is talking about Hong Kong Tax, Special business, Financial Instituition, calculating the profit tax. 

Transfer pricing ▸ New transfer pricing rule in Hong Kong ⚫ Transfer Pricing Rule 1: s.50AAF • To apply arm's length principle for transactions between associated persons for sale / transfer / use of assets and provision of services ⚫ If the 4 conditions under s.50AAF are satisfied so that the transaction is not carried out in an arm's length basis, the IRD can adjust the P&L of the taxpayer as if the transaction is carried out under arm's length basis ⚫ Transfer Pricing Rule 2: s.50AAK • • To apply separate enterprise principle to treat HK PE of non- resident person as a separate entity ⚫ The income or loss of the HK PE is calculated as if it is carrying on business based on an arm's length basis 78
Transcribed Image Text:Transfer pricing ▸ New transfer pricing rule in Hong Kong ⚫ Transfer Pricing Rule 1: s.50AAF • To apply arm's length principle for transactions between associated persons for sale / transfer / use of assets and provision of services ⚫ If the 4 conditions under s.50AAF are satisfied so that the transaction is not carried out in an arm's length basis, the IRD can adjust the P&L of the taxpayer as if the transaction is carried out under arm's length basis ⚫ Transfer Pricing Rule 2: s.50AAK • • To apply separate enterprise principle to treat HK PE of non- resident person as a separate entity ⚫ The income or loss of the HK PE is calculated as if it is carrying on business based on an arm's length basis 78
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