On 16 March 2017, Hong Kong signed agreements with six jurisdictions, namely Belgium, Canada, Guernsey, Italy, Mexico and the Netherlands, for conducting automatic exchange of financial account information in tax matters (AEOI). Confirmation of the date on which Hong Kong will commence exchanging information with these six jurisdictions has yet to be released.
As of today, Hong Kong has included Japan and the United Kingdom in its list of reportable jurisdictions, with the first automatic information exchange scheduled in 2018 for the period beginning 1 January 2017. Korea will also be added to the list of reportable jurisdictions pursuant to an agreement signed between Hong Kong and Korea in January this year.
Under the AEOI framework, all Hong Kong financial institutions are required to identify accounts held by tax residents of reportable jurisdictions, and to collect and furnish all relevant information of any reportable accounts held by such persons to the Inland Revenue Department of Hong Kong. The Inland Revenue Department will then exchange the information with the relevant tax authorities of the AEOI partner jurisdictions on an annual basis.
The Hong Kong government has indicated that it will continue to conclude bilateral AEOI agreements with more jurisdictions, and potentially by joining the Multilateral Convention on the Mutual Administrative Assistance in Tax Matters to expedite the process. Further details of the AEOI process can be found in the previous issue of our Client Alert.