Sep 2014, Issue 10
To align with the global trend - HKSAR Government supports the automatic exchange of information
In a press release dated 15 September 2014, the Secretary for Financial Services and the Treasury announced that the HKSAR Government pledged to support the "Common Reporting Standard for Automatic Exchange of Financial Account Information in Tax Matters" (CRS). The full set of CRS was issued by the Organisation of Economic Cooperation and Development (OECD) in July this year and more than 40 countries, including China, have committed to early adoption of the CRS and automatic exchange of information.
Being a responsible member of the international community of tax administration, HKSAR Government has been modifying its domestic law as a positive response to the evolving global standard on exchange of information (EoI) for tax purposes in the past few years. As the current Hong Kong regime allowing for EoI on request basis under either comprehensive double tax agreements or tax information exchange agreement no longer meets the latest global standard on EoI, the press release affirms Hong Kong’s commitment to the global standard on international tax information transparency before the G20 Finance Minister meeting on 20 to 21 September 2014 in Cairns.
In view of the possible adoption of the CRS in Hong Kong, 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
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