An amendment made to the Inland Revenue Ordinance for 2016 in Hong Kong came into effect last month on June 30th.
The amended ordinance will enable Hong Kong to provide support for the new global standard on the Automatic Exchange of Information as circulated by the OECD (Organisation for Economic Cooperation and Development). By supplying Hong Kong a legal framework for implementing the automatic exchange of financial information regarding taxation.
Towards the end of 2014, Hong Kong showed their support for the implementation of Automatic Exchange of Information on a mutual basis with suitable partners ultimately wanting to commence the first proceedings by late 2018, as long as the conditions met the required domestic legislation in place by 2017.
Following numerous Shareholders meetings which ran over two years, and additionally with the public consultation exercise which was held from April to June 2015; the Government in Hong Kong announced that an additional amended bill would be submitted to the Legislative Council in January 2016.
The bill was passed by the Hong Kong Legislative Council on June 22nd 2016. The Amendment Ordinance was published in the local Gazette on this date and came into immediate effect following the publication.
Under the Automatic Exchange of Information standard, a financial institution is obligated to categorise financial accounts held by tax residents of respective jurisdictions as per the OECD due diligence procedures. Financial Institutions must now comply by collecting the appropriate reportable information of these accounts and supply such information to the Inland Revenue Department.
The Inland Revenue Department will exchange the information with the tax authorities of the Automatic Exchange of Information partner jurisdictions on an annual basis.