On 30 June 2016, the Inland Revenue (Amendment) (No. 3) Ordinance 2016 (the Amendment Ordinance) was published in the Gazette and became effective.
The Amendment Ordinance provides a legal framework in Hong Kong for implementing automatic exchange of financial account information in tax matters (AEOI) to support the AEOI standard promulgated by the Organisation for Economic Cooperation and Development (OECD).
Following the passage of the Amendment Ordinance, Hong Kong will start identifying its AEOI partners from among the 42 jurisdictions which have signed agreements with Hong Kong on comprehensive avoidance of double taxation or on tax information exchange.
The Hong Kong Government aims to conclude AEOI negotiations by the end of 2016 and put in place necessary domestic legislation by 2017 with a view to commencing the first exchange of information by the end of 2018.
Upon the implementation of the legislation, financial institutions (FIs) in Hong Kong will have to conduct the OECD due diligence procedures to identify and furnish information of the financial accounts held by tax residents of the reportable jurisdictions which have signed AEOI agreement with Hong Kong to the IRD. FIs may request account holders to provide self-certifications on their personal information including tax residence, so as to enable FIs to identify those accounts which should be reported under the AEOI regime. The IRD will exchange the information with the tax authorities of the AEOI partner jurisdictions on an annual basis.
The website of the IRD has included some basic information about AEOI and a set of frequently asked questions for public's reference.