Hong Kong's Inland Revenue Department (IRD) is intensifying scrutiny on offshore tax exemption claims, focusing on the true location of value creation within business operations. The IRD examines the entire business chain, from supplier negotiations to market development and logistics, to determine where profits are genuinely generated. Arrangements that legally obscure the commercial substance face significant tax risks under this thorough review. To successfully obtain offshore exemptions, businesses must present a clear and verifiable picture of their overseas operations.