On January 15, 2018, the Government of Hong Kong announced that it has entered into a bilateral arrangement with France to automatically exchange country-by-country (CbC) reports filed by multinational corporations.
CbC reporting is part of a three-tiered approach to transfer pricing documentation (along with “master” and “local” files) developed under base erosion and profit shifting Action 13. These reports are to be automatically exchanged between tax administrations under relevant exchange arrangements.
In October last year, Hong Kong introduced the Inland Revenue (Amendment) (No. 5) Bill, 2017 to give effect to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which is the main platform for Hong Kong to exchange CbC reports with other jurisdictions. Since the Convention is at present not applicable in Hong Kong, bilateral arrangements for exchange of CbC reports is being made with foreign tax jurisdictions, the Government noted.
So far, Hong Kong has made such bilateral arrangements with the following jurisdictions: France, Ireland, South Africa, and the UK. The Government said that it will continue discussions with other treaty partners seeking to conclude more bilateral arrangements.
According to the OECD, there are over 1,400 bilateral exchange relationships in place, as of December 2017, between jurisdictions committed to exchanging CbC reports, with first exchanges scheduled to take place in 2018.