Questionable basis for Hong Kong asset manager tax audits

Tax practice head, Travis Benjamin was recently interviewed by International Tax Review on Hong Kong asset manager tax audits. The article explores details of the Hong Kong Inland Revenue Department (IRD) tax audit campaign focusing on asset managers and the questionable basis on which the IRD’s assessing position rests.

The article remarks that the IRD’s approach seems to counteract broader efforts by the Hong Kong Government and the local asset management industry to promote Hong Kong as an asset management hub.       

Travis explained that the technical weakness in the IRD’s position probably means that tens of millions of dollars in tax payments were unnecessarily made by asset managers. Travis believes that many of the tax audit settlements entered into by Hong Kong asset managers, at the encourage of (some) tax advisors and the IRD, on the basis of avoiding litigation “was not the appropriate strategy for some.”