Automatic exchange of fiscal information in Hong Kong

Hong Kong joined the group of countries that exchange their residents’ fiscal information with each other as an early adopter – back in 2014. It undertook to perform the first such exchange in 2018 on the condition that the required amendments to the country’s legislation were made by 2017.  

In January 2016, the Government of Hong Kong submitted the draft bill to the State Council that passed the bill on June 22, 2016. The bill went into effect on June 30 the same year and it lays the legal foundations for exchanging fiscal information with other countries of the world.  

Hong Kong banks and other financial institutions have to report to the Internal Revenue Department (IRD) the information about the accounts that they hold. This concerns both personal and corporate bank accounts. 

In March 2017, the Government suggested extending the list of partner countries with whom Hong Kong wishes to exchange information. The amendments were passed in June 2017 and the law went into force in July of the same year. 

Hong Kong

The list of partner countries was extended even further after September 1, 2018 when Hong Kong signed the OECD Convention on Mutual Administrative Assistance in Tax Matters. By January 2020, the number of partner countries reached 126.   

It should be noted, however, that more than half of these countries are only potential partners of Hong Kong in automatic exchange of fiscal information. As of December 2020, Hong Kong signed 62 bilateral agreements on automatic exchange of information. As things stand for now, the jurisdiction exchanges information de facto with the following countries:

  • Singapore;
  • Slovenia;
  • Spain;
  • Japan;
  • Sweden;
  • Malta;
  • Turkey;
  • Slovakia;
  • Portugal;
  • Finland;
  • Poland;
  • Norway;
  • Jersey;
  • Netherlands;
  • Mexico;
  • Italy;
  • Malaysia;
  • New Zealand;
  • Luxembourg;
  • San Marino;
  • Liechtenstein;
  • Latvia;
  • Korea;
  • Israel;
  • Ireland;
  • Hungary;
  • Greece;
  • Germany;
  • Faroe Islands;
  • Estonia;
  • Denmark;
  • Czech Republic;
  • Cyprus;
  • Croatia;
  • Costa Rica;
  • India;
  • Colombia;
  • Chile;
  • Canada;
  • Brazil;
  • Gibraltar;
  • Belgium;
  • Azerbaijan;
  • France;
  • Austria;
  • Switzerland;
  • Australia;
  • Isle of Man;
  • Argentina;
  • Indonesia;
  • Antigua and Barbuda;
  • China (for reporting periods starting after January 1, 2018);
  • Russia (for reporting periods starting after January 1, 2019).

Automatic exchange of fiscal information in Hong Kong: FAQ

Below please find the answers to some questions about the automatic exchange of bank account owners’ information in Hong Kong.

Who collects the information in Hong Kong that is exchanged with other countries?

Financial institutions in Hong Kong must identify the accounts that belong to residents of partner countries and supply the information to the IRD annually. After that, the IRD passes the information to the fiscal authorities of the countries whose tax residents that account owners are.

Banks and other financial institutions in Hong Kong find out about the account owners’ tax residency in the course of the due diligence procedures. They can also ask the clients to complete the self-certification form that shows their tax residency. The bank keeps the form for six years.

What is a self-certification form?

This is an official document that indicates the tax residency of the bank account owner. 

Since the amendments mentioned above were passed, all owners of bank accounts opened in Hong Kong after January 1, 2017 shall complete the self-certification form. If the account owner is unsure about his or her tax residency, s/he has to seek professional advice on the matter.

If the self-certification form contains false information (supplied intentionally or unintentionally), the account owner will have to pay a fine of ten thousand HKD. 

Who is deemed a tax resident of Hong Kong for information exchange purposes?

The following entities are considered tax residents of Hong Kong:

  • Private individuals who have spent more than 180 days in Hong Kong over the reporting period or those who have spent more than 300 days in the country over two consecutive reporting periods;
  • Businesses, companies and other organizations that are registered in Hong Kong or administered from Hong Kong. 

What should I do if my tax residency changes?

If you have a bank account in Hong Kong and your tax resident status changes, this means that the information that you have supplied in the self-certification forms becomes outdated. You have to report the change of your tax residency within 30 days since the date when the change went into effect. 

How can I find out what country I am a tax resident of?

Normally, a private individual who resides in a country for more than 183 days in a calendar year is considered a tax resident of this state. Tax residency of corporate entities depends on where the company is registered and where it is administered from. 

The fact that a person has paid some taxes in a certain country (the VAT, capital gains or withholding tax, for example) does not automatically make this person a tax resident of the country. Our experts will gladly help you optimize your tax residency if you wish.

I am a tax resident of one of Hong Kong’s partner countries and I have a bank account in Hong Kong. What information does the jurisdiction exchange with my home country’s fiscal authorities?

The following information is automatically exchanged:

  • Name;
  • Place of residence;
  • Date and place of birth;
  • Taxpayer’s identification number;
  • Bank account number;
  • Account balance (at year-end);
  • The amount of interests, dividends, and other profits obtained. 

Can I refuse exchange my financial information with the fiscal authorities of my home country?

No. If you try to stop the Hong Kong bank from supplying your financial information to the IRD, the bank will immediately close your account. (This applies only if you are a tax resident in one of Hong Kong’s partner countries). At the same time, you are welcome to request your bank account information from the bank administrators at any time.

Professional support in opening a foreign bank account

 Many people do not realize what consequences might follow if they say something wrong to the bank officer. The latter resembles a police inspector these days! S/he will check the client’s background scrupulously and closely monitor all the financial operations that they perform. The bank officer has to be suspicious because this is what the regulating authorities require from him/ her.If you have any questions related to automatic exchange of fiscal information in Hong Kong, please do not hesitate to contact us by email info@offshore-pro.info or call us at +372 5 495 26 39 . We will be happy to offer you a free consultation on setting up a foreign bank account. We will also gladly help you optimize your tax residency, protect your assets, expand your business activities, and you’re your wealth.

Why did Hong Kong join the group of countries that automatically exchange fiscal information?

Automatic exchange of financial information is a new global standard that has been introduced with the purpose of combating money laundering and terrorism financing. The Common Reporting Standards (CRS) that the OECD came up with in July 2014 make it obligatory for all countries to collect the bank account owners’ information and exchange it with the authorities of their home countries. Hong Kong is one of the largest financial centers of the world and of course, it has to comply with the international requirements.

How does Hong Kong protect the confidentiality of the information that it exchanges?

The Hong Kong Internal Revenue Department exchanges financial information only with those jurisdictions that have the corresponding bilateral agreements with the territory. Hong Kong does not sign such agreements with countries that cannot guarantee the protection of the taxpayer’s privacy and the confidentiality of his/ her financial information in accordance with the international standards. If any of Hong Kong partner states violates the rules or fails to protect the taxpayer’s rights, the authorities of the country may sustain or even terminate the agreement.

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