Start Preparing for Automatic Tax Information Sharing, says SFC

Hong Kong's securities regulator has warned all licensed corporations in the territory to be prepared for the implementation next year of a new tax ordinance which will facilitate the automatic sharing of tax information with other jurisdictions. The Securities and Futures Commission ("SFC") said firms would have to comply with requirements under the Inland Revenue (Amendment) (No. 3) Ordinance 2016 by collecting information on relevant financial accounts each calendar year from 2017, and furnish the information to the Inland Revenue Department ("IRD") each following year.

The SFC said Hong Kong was aiming to conclude negotiations with foreign partners under the Automatic Exchange of Financial Account Information ("AEOI") initiative by the end of 2016. 

SFC-licensed firms would be subject to a statutory requirement to supply information under the AEOI initiative, it added. The initiative is intended to enhance tax transparency and combat cross-border tax evasion. It stipulates due diligence obligations on financial institutions to identify financial accounts held by tax residents of reportable jurisdictions, collect the reportable information of these accounts and furnish the information to the IRD, the SFC said. The IRD will then exchange the information with the tax authorities of the AEOI partner jurisdictions on an annual basis.

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North Asia editor for Thomson Reuters Regulatory Intelligence. He is based in Hong Kong.