Us Hong Kong Tax Information Exchange Agreements

“TIEA with the United States provides Hong Kong with the necessary basis to provide EoI upon request for information provided to the United States by Hong Kong financial institutions under the U.S. Account Compliance Act (FATCA)…… Subject to the conclusion of the ongoing talks, Hong Kong intends to conclude an intergovernmental agreement with the United States defining the modalities for facilitating compliance by Hong Kong`s financial institutions. A complementary measure will allow U.S. tax authorities to apply for IRD assistance under certain conditions. As pressure for greater tax transparency and closer cross-border cooperation between tax authorities continues to grow, Hong Kong may need to continue to develop its TIEA network with countries that are not currently willing to sign a CDTA with Hong Kong. In addition, the OECD`s publication on 13 February 2014 of the Common Reporting Standard, which provides for a new international standard for automatic EoI3, will put increasing pressure on Hong Kong to switch to automatic EoI as the latest standard for the exchange of information. EoI is a developing area in the international arena and in Hong Kong. Multinational companies with cross-border transactions/operations should remain ready to operate in this area and be prepared to assess the potential impact of the evolution of the EOI regime on them. The HK-US TIEA essentially follows the OECD TIEA model, with some modifications.

There is no significant difference between the HK-US TIEA and the Global Double Taxation Agreements (CDTAs) that Hong Kong has concluded to date with respect to the scope of information exchange and compliance with data privacy and protection legislation. As pressure for greater tax transparency continues to grow and automatic information exchange (IEC) becomes the last international standard for the IEO, the EoI regime is expected to expand in Hong Kong. Multinational companies with cross-border transactions/operations should remain ready to expand in this area and be prepared to assess the potential impact of the changing EOI landscape on them. In this regard, legal systems may be based on a bilateral agreement between the competent authority for the implementation of the automatic exchange of information in accordance with the common standard of notification or automatic exchange of reports by country on a TIEA, particularly in cases where it is not (yet) possible to automatically exchange information through the relevant authority within the framework of a relevant multilateral agreement.