The Multilateral Convention on Mutual Administrative Assistance in Tax Matters ("Multilateral Convention") is expected to be the prime instrument for international tax co-operation. For example, all the 102 jurisdictions that are committed to the automatic exchange of financial account information in tax matters ("AEOI") have either joined or indicated the intention to join the Multilateral Convention.

The Hong Kong Government has stated that a bilateral approach “has become increasingly impractical given the continued expansion in the scope and network of tax information exchanges in the international community.”1 As such, Hong Kong is in the process of effecting the Multilateral Convention. Participating in the Multilateral Convention will provide Hong Kong with an important platform to implement AEOI as well as other information exchange standards that are part of the project by the Organisation for Economic Cooperation and Development ("OECD") to combat base erosion and profit shifting ("BEPS").

You can read here our Client Alert of 20 June 2017 where we discussed the expansion of Hong Kong’s AEOI network and the steps that the Hong Kong Government is taking to join the Multilateral Convention.

The amendment of the Inland Revenue Ordinance to facilitate international tax co-operation

The Chief Executive in Council currently does not have powers under the Inland Revenue Ordinance ("IRO") to give effect to multilateral agreements or arrangements for international tax co-operation. The Inland Revenue (Amendment) (No. 5) Bill 2017 ("Amendment Bill"), which was gazetted on 6 October 2017, aims to prepare the way for Hong Kong’s participation in the Multilateral Convention by empowering the Chief Executive in Council to give effect to the Multilateral Convention and other arrangements for implementing initiatives of international tax co-operation.

The Amendment Bill is also aimed at aligning the relevant provisions of the IRO with the Common Reporting Standard ("CRS"). The CRS is promulgated by the OECD as the global standard for AEOI in order to combat BEPS, and sets out the financial information to be exchanged and the obligations of financial institutions to conduct due diligence and collect account holder information.

The Amendment Bill is scheduled for First Reading on 18 October 2017.

Implementation of AEOI on a bilateral basis between Hong Kong and New Zealand

Additionally, the Chief Executive in Council has made the Inland Revenue (Double Taxation Relief and Prevention of Fiscal Evasion with respect to Taxes on Income) (New Zealand) (Amendment) Order 2017 ("Amendment Order") to implement the Second Protocol to the Agreement between Hong Kong and New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income ("New Zealand Agreement"). The New Zealand Agreement is currently limited to exchanges of information on request. The Second Protocol will enable Hong Kong and New Zealand to implement AEOI on a bilateral basis prior to the Multilateral Convention coming into effect in Hong Kong.

It is expected that the Amendment Order will be tabled at the Legislative Council on 18 October 2017 for negative vetting.


The enactment of domestic legislation by Hong Kong to allow the Chief Executive in Council to give effect to the Multilateral Convention moves Hong Kong closer to the international community’s goals of enhancing global tax transparency and preventing BEPS. Furthermore, the Amendment Order is consistent with Hong Kong’s commitment to implement AEOI with New Zealand.

This alert also aims to serve as a reminder that the intended date for the first exchange of information by Hong Kong is September 2018 with respect to financial account information for 2017, and Hong Kong financial institutions will be required to submit the relevant data to the Inland Revenue Department by May 2018. It is important that financial institutions ensure that their CRS documentation and policies are in place, and their staff are adequately trained and receive regular updates on CRS.

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