Form BIRS2 Transfer Pricing and International Tax Obligations
How to complete Form BIRS2 for transfer pricing and international tax disclosures in Hong Kong.
BIRS2 at a glance
- Official title
- Transfer pricing and international tax obligations
- Issued by
- Inland Revenue Department
We link the issuing authority's own index rather than hosting a copy, because the form is revised there and an out-of-date copy is worse than none.
Form BIRS2 Transfer Pricing and International Tax Obligations
Form BIRS2 is the supplementary form for multinational enterprise groups disclosing transfer pricing and international tax obligations with a Profits Tax Return (BIR51). Taxpayers provide detailed information on related-party transactions, the application of the arm's length principle, and compliance with international tax standards like country-by-country reporting. The Inland Revenue Department uses these disclosures to assess if a taxpayer's transfer pricing arrangements align with Hong Kong's tax obligations under double taxation agreements and the Base Erosion and Profit Shifting (BEPS) framework.
BIRS2 Transfer Pricing Disclosure Hong Kong
The BIRS2 transfer pricing disclosure in Hong Kong requires reporting all transactions with associated enterprises. This covers dealings in goods, services, intellectual property, and financing. For each category, the form asks for the transfer pricing methodology applied, such as the comparable uncontrolled price method, resale price method, cost plus method, transactional net margin method, or profit split method. Taxpayers must state if they prepared transfer pricing documentation per the Inland Revenue Department's practice notes and if transactions comply with the arm's length principle. Both domestic and cross-border related-party dealings are disclosed, and the taxpayer must identify each associated enterprise's jurisdiction.
Form BIRS2 International Tax Guide
Form BIRS2 is part of the IRD's broader compliance framework for multinational enterprises. Taxpayers must confirm if they belong to a multinational enterprise group with consolidated group revenue exceeding HK$750 million, which triggers mandatory country-by-country reporting. The form also requires disclosure of any permanent establishments operated outside Hong Kong and any transactions that may raise tax avoidance concerns under the BEPS Action Plan. If the disclosures on Form BIRS2 indicate potential non-compliance with the arm's length principle, the Inland Revenue Department may request additional transfer pricing documentation, a master file, or a local file.
Inland Revenue Transfer Pricing Form
The Inland Revenue transfer pricing form, Form BIRS2, must be completed and submitted electronically through the Business Tax Portal by in-scope multinational enterprise groups. This electronic filing requirement applies from the year of assessment 2025-26. The form must be accompanied by financial statements and tax computations tagged in iXBRL format. Taxpayers not in a multinational enterprise group may still need to complete Form BIRS2 if they have significant related-party transactions or if the Inland Revenue Department specifically requests it. The form includes sections to identify the taxpayer entity's controlling person, the group's ultimate parent entity, and the tax residence of each associated enterprise.
BIRS2 Filing Requirements
File Form BIRS2 together with the Profits Tax Return (BIR51) within the time limit stated on the return. The Inland Revenue Department issues the BIR51 and supplementary forms, including Form BIRS2, to taxpayers selected for review based on their business activities and transaction patterns. Information on Form BIRS2 must be consistent with the submitted financial statements and tax computation. The form requires a declaration by the taxpayer or an authorised representative confirming the transfer pricing disclosures are complete and accurate. Failure to file or providing false or misleading information may result in penalties under the Inland Revenue Ordinance (Cap. 112).
Related-Party Transaction Categories
Form BIRS2 requires categorising related-party transactions. These include purchases and sales of goods, provision of services, royalty payments, interest on loans, management fees, and transactions involving intangible assets. For each category, disclose the total transaction amount, the transfer pricing method applied, and whether the transaction is priced at arm's length. The form also requests details on cost contribution arrangements or intra-group services that may need adjustment under the arm's length principle. Taxpayers must identify the associated enterprise counterparty by name, jurisdiction, and relationship, such as parent company, subsidiary, or fellow subsidiary.
Country-by-Country Reporting Triggers
Country-by-country reporting triggers on Form BIRS2 apply to multinational enterprise groups with consolidated group revenue of HK$750 million or more in the preceding fiscal year. Taxpayers in these groups must confirm if the group filed a country-by-country report with the Inland Revenue Department or the tax authority of the group's ultimate parent entity jurisdiction. The form requires the group's country-by-country reporting reference number and the reporting entity's jurisdiction. If the group has not filed a country-by-country report, the taxpayer must explain why, such as the group being below the revenue threshold or the report being filed in another jurisdiction under a qualifying competent authority agreement.
Supporting Documentation and Compliance
Taxpayers completing Form BIRS2 should maintain supporting transfer pricing documentation. This includes a master file and local file as recommended by the Inland Revenue Department's Departmental Interpretation and Practice Notes. The documentation must demonstrate compliance with the arm's length principle and be available for inspection upon request. The form also requires disclosure of any advance pricing agreement application or a transfer pricing ruling received from the Inland Revenue Department. The department may use the information on Form BIRS2 to select taxpayers for transfer pricing audits or to initiate mutual agreement procedures under double taxation agreements.
Electronic Filing Through Business Tax Portal
Form BIRS2 must be filed electronically through the Business Tax Portal for multinational enterprise groups subject to mandatory electronic filing. The portal allows online form completion, attachment of supporting documents in iXBRL format, and direct submission to the Inland Revenue Department. Taxpayers not subject to mandatory electronic filing may submit Form BIRS2 on paper, but the Inland Revenue Department encourages electronic filing for efficiency and accuracy. The Business Tax Portal provides guidance on form completion and data validation before submission. An authorised person, such as a director, company secretary, or tax representative, must sign the form before submission.
Penalties for Non-Compliance
Failure to file Form BIRS2 or providing incomplete or inaccurate information may result in penalties under the Inland Revenue Ordinance (Cap. 112). If the failure to disclose transfer pricing information is due to wilful default or negligence, the Inland Revenue Department may impose a penalty of up to three times the amount of tax undercharged. Late filing penalties also apply. The department may issue a notice requiring additional transfer pricing documentation or an interview to explain the disclosures on Form BIRS2. Seek professional advice if unsure about transfer pricing obligations or how to complete Form BIRS2.
How to fill out Form BIRS2
Page one of the official form. Every field named below appears on it in the same order.
Part 1 - General Information
1. Name of the taxpayer
Enter the full legal name of the entity as it appears on the Profits Tax return or the Business Registration certificate.
2. Business Registration Number
Enter the 8-digit Business Registration number. This is printed on the Business Registration certificate issued by the Inland Revenue Department.
3. Year of assessment
Enter the year of assessment to which this form relates (e.g., “2023/24”). This must match the year shown on the Profits Tax return being filed.
4. Total turnover / gross income
Enter the total turnover or gross income for the year, in Hong Kong dollars. This figure should be taken from the audited financial statements or the Profits Tax return.
5. Total assets
Enter the total assets as at the end of the year of assessment, in Hong Kong dollars. Use the figure from the balance sheet in the audited accounts.
6. Number of employees
Enter the total number of employees (including directors) employed by the taxpayer during the year. Count full-time and part-time staff.
Part 2 - Transfer Pricing Documentation
7. Does the taxpayer have any transactions with associated enterprises?
Tick “Yes” or “No”. If “No”, skip to Part 3. If “Yes”, complete the remaining boxes in Part 2.
8. Total value of transactions with associated enterprises
Enter the aggregate value of all transactions with associated enterprises, in Hong Kong dollars. This includes sales, purchases, loans, royalties, and service fees.
9. Has the taxpayer prepared transfer pricing documentation?
Tick “Yes” or “No”. If “No”, you may need to explain why in a separate note.
10. If yes, what type of documentation?
Tick all that apply: Master file, Local file, or Country-by-country report. The Master file and Local file follow OECD guidelines; the Country-by-country report is required for multinational groups with consolidated group revenue of at least HK$7.5 billion.
Part 3 - International Tax Obligations
11. Does the taxpayer have any permanent establishment outside Hong Kong?
Tick “Yes” or “No”. If “Yes”, provide the jurisdiction and nature of the PE in the space provided.
12. Has the taxpayer claimed any double taxation relief?
Tick “Yes” or “No”. If “Yes”, specify the type of relief (e.g., tax credit, exemption, or deduction under a Comprehensive Double Taxation Agreement).
13. Does the taxpayer have any reportable cross-border arrangements?
Tick “Yes” or “No”. If “Yes”, you must also file a separate disclosure under the Mandatory Disclosure Rules (Form MDR1).
Signatures
The form must be signed by the taxpayer (if an individual) or by a director, secretary, or manager (if a company). The signatory must date the form and print their full name and position. Do not leave the signature block blank - the IRD will reject an unsigned form.
Common mistakes:
- The Business Registration number must be exactly as on the BR certificate - no spaces or hyphens.
- The year of assessment must match the Profits Tax return year.
- If you tick “Yes” in box 7, you must complete box 8 - do not leave it blank.
- If you tick “Yes” in box 13, you must also file Form MDR1 - the IRD cross-checks this.
- Use a continuation sheet (Form BIRS2/S) if you need more space for any answer - do not attach loose pages.
Download the current form - always file the version on the issuing authority's site, not a copy.
Sources
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