What is CbCR?

Country-by-Country Reporting (CbCR) is an international tax reporting standard developed by the Organisation for Economic Co-operation and Development (OECD). It is designed to enhance transparency by requiring multinational enterprise group (MNE Group) to disclose key financial and operational information on a country-by-country basis.

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CbCR Notification Requirements in Hong Kong:

In Hong Kong, CbCR requirements were introduced as part of the Inland Revenue Ordinance.  The regulations apply to MNE Group with consolidated group revenue exceeding HKD 6.8 billion (approximately USD 870 million / EUR 750 million) in the preceding fiscal year.

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Key requirements of the CbCR Notification in Hong Kong are as follows:

1. Filing Obligation: MNE Group meeting the revenue threshold must submit a CbCR Notification to the Inland Revenue Department (IRD) within 3 months after the end of the relevant fiscal year.

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2. Information to be Disclosed: The CbCR Notification should include detailed information about the reporting entity:

• CbC ID Number

• Business Address

• Service Provider engaged by the Reporting Entity under Section 56M of the Inland Revenue Ordinance

• Details of Reportable Group, including

  • Industry Sector

  • Consolidated group Revenue

  • Ultimate Parent Entity

  • other Hong Kong entities of the Group etc

 

How CK Tax assists Client in handling CbCR Notification

1. Prepare Form IR1465 and appoint CK Tax as Service Provider (engaged by the Reporting Entity under Section 56M of the Inland Revenue Ordinance)

2. Submit CbCR Notification for or on behalf of the Reporting Entity

 

CbCR Notification Conclusion:

Hong Kong's CBCR Notification requirements aim to enhance tax transparency and combat tax avoidance. MNEs meeting the revenue threshold must comply with the regulations by submitting a detailed CBCR Notification to the Inland Revenue Department. While compliance may increase the administrative burden on businesses, it also promotes transparency and aligns Hong Kong with international tax transparency standards.

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By adhering to CbCR requirements, businesses can demonstrate their commitment to responsible tax practices and maintain a positive relationship with tax authorities. It is essential for MNEs operating in Hong Kong to stay updated on the latest developments and ensure compliance with CbCR regulations to navigate the evolving global tax landscape successfully.