Taxation treatment of electronic commerce in Hong Kong

Nick Dignan, tax partner in PricewaterhouseCoopers, Hong Kong, discusses the implications of the new DIPN for businesses conducting ecommerce in Hong Kong.

 

In July 2001, the Hong Kong Inland Revenue Department IRD issued the Departmental Interpretation and Practice Notes DIPN No. 39. The DIPN outlines the assessing practice that will be applied by the IRD in relation to profits derived from electronic commerce ecommerce.

The impact of the DIPN is broadly favourable to the conduct of ecommerce in Hong Kong and is consistent with the approach being taken by Hong Kongs main trading partners. The increased level of certainty provided by the IRDs first formal guidance on the issue is to be welcomed.

Nevertheless, some caution is required. The DIPN is expressed in fairly general terms and the rather basic examples provided...

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