Hong Kong indicated it will support the new automatic exchange of tax information to improve tax transparency and fight cross-border tax evasion, overseen by the Global Forum on Transparency and Exchange of Information for Tax Purposes. This is in line with many countries’ move toward transparency. The same thing is happening in Europe and other parts of Asia including Japan.
Under the common reporting standard, governments obtain detailed account information from financial institutions in their jurisdictions and then annually exchange that data with the account holders’ residence jurisdictions.
Hong Kong says it is committed to implementing the new global standard with partners that can meet relevant requirements on protection of privacy and confidentiality of information and ensure proper use of the data.
Over the past years, Hong Kong has moved toward meeting the evolving international standard on exchange of information by:
- Removing the domestic tax interest requirement in conducting exchange of information under comprehensive double taxation avoidance (DTA) agreements, and
- Putting in place the legal framework to enter into tax information exchange agreements (TIEAs) with other jurisdictions. Hong Kong’s existing legal framework allows for such exchanges only under either DTAs or TIEAs.
Hong Kong has so far concluded 30 DTAs, 11 of which are signed with its top 20 trading partners. DTA discussions with other jurisdictions are in the pipeline, including Germany, Russia, India, Saudi Arabia, South Africa, Finland and Latvia.
According to the latest timeline, the first automatic information exchanges are to start by the end of 2018.
The standard is overseen by the Global Forum, the multilateral framework within which economies inside and outside the Organization of Economic Cooperation and Development conduct their work in the area of transparency and information exchange.
If you have any questions about foreign financial accounts reporting, please feel free to contact Koh Fujimoto.