Hong Kong's Government has announced that it will refine its legislative proposals for implementing the international standard on the automatic exchange of financial account information in tax matters (AEOI).
In September 2014, Hong Kong told the Organization for Economic Cooperation and Development (OECD), which developed the Common Reporting Standard (CRS), that it supports its new standard on AEOI and will commence the first information exchanges by the end of 2018.
The commitment was premised with the condition that Hong Kong could put in place the necessary domestic legislation by 2017. To take that commitment forward, the Government launched a consultation exercise from April to June, 2015.
"Based on valuable feedback from over 40 stakeholders, we have formulated a consolidated response and will refine the legislative proposals as set out in the consultation document for the implementation of AEOI in Hong Kong," a government spokesperson said.
The Government's AEOI proposals would alter the definition of financial institutions (FIs) to ensure that certain trust companies beyond the coverage of the CRS will not be unnecessarily caught by the proposed legislation, and to state explicitly that registered Mandatory Provident Fund Schemes, Occupational Retirement Schemes, and Credit Unions will be non-reporting FIs and that dormant accounts will be excluded.
There will be a mandatory requirement for FIs to carry out the due diligence procedures set out in the CRS to identify and collect information on reportable accounts, and appropriate penalty provisions will be put in place "to provide for sufficient deterrent effect to ensure effective implementation of the AEOI regime in Hong Kong."
The previous provisions to delineate the powers of the Inland Revenue Department to collect relevant information from FIs and forward it to bilateral AEOI partner jurisdictions, and necessary confidentiality provisions, will also remain.
The Government has previously emphasized that it will conduct AEOI with jurisdictions with which Hong Kong has signed a comprehensive avoidance of double taxation agreement or a tax information exchange agreement. In identifying AEOI partners, it is also to take into account their capability in meeting the OECD standard and in protecting data privacy and the confidentiality of the information exchanged under their domestic laws.
"We are working on the draft amendment bill, which will incorporate the latest features as set out in the consolidated response. We will press ahead to introduce the bill into the Legislative Council in early 2016, so as to meet the implementation plan," the spokesperson added.
By Courtesy of Lowtax.net
