Does tax transparency mean a higher tax audit risk?
The increasing tax transparency in the global tax environment started few years ago since the launch of Base Erosion and Profit Shifting (BEPS) initiatives by the Organisation for Economic Co-operation and Development (OECD). In addition to the action plans proposed under the BEPS initiatives, the collaboration between tax authorities around the world are now the strongest in the history and it will be growing. The implementation of Foreign Account Tax Compliance Act (FATCA) enacted by the United States in 2010 followed by the Common Reporting Standard (CRS) developed by OECD are the clear indications.
Under the above environment, how will the tax authorities in Hong Kong make use of the data collected in the tax audit situation? What are the potential impact in the selection of tax audit target. Ernst & Young (EY) Hong Kong Tax controversy team would like to share their view on this subject.