Services > Taxation > Tax Investigation & Field Audit
Tax Investigation and Field Audit
Tax investigation and field audits
As a consequence of having a narrow tax base, the Hong Kong SAR Government is under tremendous pressure to increase revenue. One way to achieve this is by combating tax evasion and tax avoidance. The Inland Revenue Department (“IRD”) has pursued this objective by increasing the number of officers and teams in its Field Audit and Investigation Unit over the past few years. As a result, more taxpayers from a greater variety of businesses and industries have been selected for review and examination.
The work of field auditors, being officers of the IRD, entails site visits to business premises and examination of taxpayers' accounting records to ascertain whether correct returns of profits have been made.
These IRD officers are responsible for conducting in-depth investigations when tax evasion is suspected, and taking penal action (including criminal prosecution in certain cases) to create a deterrent to tax evasion.
How Baker Tilly Hong Kong can help
Baker Tilly Hong Kong has significant experience in handling tax investigation and field audit cases. Our team works to secure a prompt and fair settlement for our clients. We can also advise companies and liaise with the IRD to ensure that when penalties do apply, they are kept to a minimum.
When issues of cross-border transfer pricing between group companies is involved, it is not easy to obtain compromise settlement with the IRD. The IRD does not have a set of rules to determine whether a particular transaction is conducted at arm's length. Rather, the burden is on the taxpayer to prove that a particular transaction is conducted at arm's length. Baker Tilly can help clients prepare these materials to submit to the IRD.
When there has been a failure on the part of the taxpayer to comply with certain tax reporting obligations, legitimate reasons as laid down in various court cases may be applied to mitigate the penalty imposed by the IRD. Baker Tilly can also help prepare this type of reply to the IRD, when appropriate.
For further enquiries, please contact:
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