Hong Kong, USA Work Toward FATCA IGA

NEWS 2020

Photo: By FATCA

By Courtesy of Taxnew

On March 25, Hong Kong and the United States signed a tax information exchange agreement (TIEA), which will provide the necessary basis for Hong Kong to enter into an intergovernmental agreement (IGA) to adhere to the United States Foreign Account Tax Compliance Act (FATCA).

Hong Kong's Secretary for Financial Services and the Treasury, Professor K C Chan, and the Consul-General of the US to Hong Kong and Macau, Clifford A Hart, signed the TIEA, which is the first such agreement signed by Hong Kong after the legal framework for entering into TIEAs on a standalone basis with other jurisdictions was put in place in July last year.

Hong Kong is now able to complete TIEAs, providing for the exchange of information (EoI) by the Inland Revenue Department, upon request from another jurisdiction, in tax matters. Previously, EoI provisions were included solely in comprehensive double taxation agreements (CDTAs).

Welcoming the agreement, Professor Chan said that the signing of the TIEA with the US demonstrates Hong Kong's continued commitment to fulfilling its international obligations by promoting tax transparency. He added that Hong Kong would continue its efforts to expand the network of CDTAs.

Professor Chan said that "the TIEA with the US has adopted highly prudent safeguard measures to protect taxpayer privacy and the confidentiality of information exchanged.

Under FATCA, foreign financial institutions are required to report financial information in respect of their US clients.

Subject to the completion of ongoing discussions, it was confirmed that Hong Kong intends to enter into an IGA with the US to lay down the arrangements which help facilitate compliance by financial institutions in Hong Kong.