Wednesday, October 11, 2017
Hong Kong's Inland Revenue has gazetted a law to become party to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
It will also align the Inland Revenue Ordinance (IRO) with the Common Reporting Standard (CRS), the OECD's new information exchange standard providing for automatic information exchange.
The IRO was amended in June 2016 and further amended in June 2017 to mandate financial institutions to collect account information of tax residents from 75 jurisdictions so that this information can be exchange automatically under the CRS.
Participation in the Convention will facilitate these exchanges, exchanges of country-by-country reports, and the spontaneous exchange of information on tax rulings.
On its intended participation in the Multilateral Convention, the Government said: "Whilst a bilateral approach is allowed for the exchange of relevant information and reports, it has become increasingly impractical given the continued expansion in the scope and network of tax information exchanges in the international community. A more practical approach is for jurisdictions to adopt the Multilateral Convention as a basis to implement the initiatives. The Chief Executive in Council currently does not have the power under the IRO to give effect to multilateral tax agreements or arrangements for international tax co-operation other than affording relief from double taxation and exchange of information. The Amendment Bill aims to remove the limitation so as to facilitate Hong Kong's participation in multilateral tax agreements and new areas of international tax co-operation."