Document background
Tax Funding Agreements are essential instruments for corporate groups operating in Hong Kong, particularly those with multiple subsidiaries or complex organizational structures. These agreements become necessary when a corporate group needs to establish clear mechanisms for managing and funding tax obligations across its various entities. The Tax Funding Agreement specifically addresses how tax liabilities will be calculated, funded, and paid within the group, ensuring compliance with Hong Kong's Inland Revenue Ordinance and related tax regulations. It typically includes provisions for regular tax payments, adjustments, record-keeping, and the handling of tax disputes. The agreement is particularly important for groups seeking to optimize their tax efficiency while maintaining proper corporate governance and regulatory compliance. It serves as a formal framework for managing intra-group tax arrangements and is often required by auditors and tax authorities to demonstrate proper tax management practices.
