Automatic Exchange of Financial Account Information (AEOI)

In September 2014, Hong Kong indicated its support for implementing automatic exchange of financial account information (AEOI) on a reciprocal basis with appropriate partners with a view to commencing the first exchanges by the end of 2018, on condition that we could put in place necessary domestic legislation by 2017.
The Inland Revenue (Amendment) (No. 3) Ordinance 2016, which commenced operation on 30 June 2016, put in place a legislative framework for Hong Kong to implement AEOI.

Under the AEOI standard, financial institutions are required to identify financial accounts held by tax residents of reportable jurisdictions in accordance with due diligence procedures.  Required information of these accounts has to be collected and furnished to the Department.  Such information will be exchanged on an annual basis.

“Tax residents of reportable jurisdictions” refer to those who are liable to tax by reason of residence in the jurisdictions.  In general, whether or not an individual is a tax resident of a jurisdiction is determined by having regard to the person’s physical presence or stay in a place (e.g. whether over 183 days within a tax year) or, in the case of a company, the place of incorporation or the place where the central management and control of the entity is exercised.

Why is this relevant to me?
If you have assets or income outside of the jurisdiction that you are tax resident in, then you should be aware that a range of financial information may be shared with your jurisdiction of residence. Over 100 tax authorities across the world have agreed to share this financial information from 2017 or 2018 under what is called the Common Reporting Standard (CRS), and some information that will be shared has already been collected.

What do I need to do?
If you are confident that your tax affairs are up to date and compliant for your jurisdiction of residence, then you do not need to worry. Where you are unsure about your tax liabilities, we recommend that you seek advice from a tax professional as soon as possible, to check that your tax affairs are in order and find out whether you need to act now to update your tax affairs.

If you have any questions regarding above matters, please do not hesitate to contact Tony Chan & Co. CPA for more information.