Jun 2014, Issue 8
A global move to automatic exchange of financial account information
On 13 February 2014, the Organisation of Economic Cooperation and Development released a new global standard for automatic exchange of financial account information between governments. The new standard consists of the (1) Common Reporting Standard and (2) Model Competent Authority Agreement. With the global move to automatic exchange of information (AEoI), Hong Kong will need to rethink its current policy of exchanging information upon request only and to consider moving to AEoI in the future. To do so, Hong Kong will need to put in place a legal framework for AEoI and an effective administrative system to implement AEoI in practice.
In view of the possible adoption of the CRS in Hong Kong in the future, financial institutions should assess whether their existing compliance and information systems are flexible enough to accommodate the additional reporting and due diligence obligations under the CRS. For taxpayers in general, the boosted international transparency under the CRS will serve as another deterrent to the use of offshore accounts, by both individuals and entities, to avoid domestic tax liabilities. Other issues of Hong Kong Tax News Flash
Visit our Tax Library