April 2020 - Hong Kong issued advance ruling on interpretation of permanent establishment

In February 2020, the Hong Kong Inland Revenue Department (“IRD”) published an advance ruling case on interpretation of Permanent Establishment (“PE”) in Hong Kong.

This advance ruling is relevant to Transfer Pricing Rule 2 (“TP Rule 2”), which commenced its application in 2019. Rule 2 in Section 50AAK of the Inland Revenue Ordinance (“IRO”) deals with the attribution of profits to a PE of a non-Hong Kong resident in Hong Kong under the separate enterprises principle.

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