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Hong Kong Guides On Automatic Tax Information Exchange

by Mary Swire, Lowtax.net, Hong Kong
14 September, 2016

Hong Kong's Inland Revenue Department (IRD) has issued guidance for financial institutions and stakeholders on the adoption of the automatic exchange of information (AEOI).

Hong Kong has committed to automatically exchange tax information on a reciprocal basis with other countries with which it has an agreement on such, with the first exchanges to take place by the end of 2018. This commitment was on the condition that Hong Kong could put in place the necessary domestic legislation by 2017.

The Inland Revenue (Amendment) (No. 3) Ordinance 2016 was published on June 30 this year and went into immediate effect.

Under the AEOI standard, an financial institutions (FI) is required to identify financial accounts held by tax residents of reportable jurisdictions in accordance with due diligence procedures. They are required to collect the reportable information of these accounts and furnish such information to the IRD, which will exchange the information with the tax authorities of the AEOI partner jurisdictions annually.

"Tax residents of reportable jurisdictions" are those liable to tax in a jurisdiction with which Hong Kong has entered into an AEOI arrangement. Financial institutions must report only information covering these taxpayers.

FIs may request account holders to provide self-certifications on their personal information, including their tax residence, to enable FIs to identify those accounts that should be reported under the AEOI regime.

To assist FIs to fulfill their AEOI obligations, the IRD has added links on its website to details of the relevant legislation, and to guidance for FIs, including the IRD's views on the due diligence procedures required by the OECD's Common Reporting Standard.

Information is also provided on the self-certification process for account holders; the Financial Account Information Return XML Schema and User Guide for supplying information to the IRD; and answers to a number of frequently asked questions.

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