Hong Kong’s Inland Revenue Department (IRD) recently issued a revised practice note (Revised DIPN 39) which indicates that a non-Hong Kong resident enterprise which maintains only a server in Hong Kong, without the involvement of human activities in Hong Kong, is now exposed to tax in Hong Kong. This change in position appears to be a result of the recent change to the definition of “permanent establishment” (PE) in the Inland Revenue Ordinance and to a change in the IRD’s application of the source principles to this situation.Revised DIPN 39 outlines that a non-Hong Kong resident corporation, which has no employees...