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Hong Kong Account Holders: How to Report AEOI

Updated:2018-9-12 11:15:07    Source:www.tannet-group.comViews:37

Hong Kong account holders with financial institutions are required to report their tax residency information to the Inland Revenue Department (IRD) as of July 1, 2017. In recent years, the most notable and the most drastic change in the worldwide tax framework is the “Standard for Automatic Exchange of Financial Account Information in Tax Matters” (AEOI), commonly referred to in its abbreviation the Common Reporting Standard (CRS) developed by the Organization for Economic Cooperation and Development (OECD).

Under the AEOI standard, financial institutions are required to identify financial accounts held by tax residents of reportable jurisdictions or held by passive non-financial entities whose controlling persons are tax residents of reportable jurisdictions in accordance with due diligence procedures. Required information of these accounts has to be collected and furnished to the Department. Such information will be exchanged on an annual basis.

Information on Tax Residency
1. Criteria for Individuals to be considered a tax resident
An individual is regarded as a tax resident of Hong Kong, China if:
(a) he/she ordinarily resides in Hong Kong, China; or
(b) he/she stays in Hong Kong, China for more than 180 days during a year of assessment or for more than 300 days in two consecutive years of assessment one of which is the relevant year of assessment.

Note: An individual is generally considered “ordinarily residing” in Hong Kong, China if he/she has a permanent home in Hong Kong, China where he/she or his/her family lives.

2. Criteria for Entities to be considered a tax resident
An entity is regarded as a tax resident of Hong Kong, China if:
(a) (where the entity is a company) the company is incorporated in Hong Kong, China; or if the company is incorporated outside Hong Kong, China, being normally managed or controlled in Hong Kong, China; (b) (where the entity is not a company) the entity is constituted under the laws of Hong Kong, China; or if the entity is constituted outside Hong Kong, China, being normally managed or controlled in Hong Kong, China.

Note: The legal concept “normally managed or controlled” does not require that both management and control be exercised in Hong Kong, China.

How to Report AEOI in Hong Kong?
Account holders may be requested to provide self-certifications on their personal information including tax residence, so as to enable financial institutions to identify the reportable accounts.  Hong Kong will only conduct AEOI with a reportable jurisdiction when an arrangement is in place with the reportable jurisdiction concerned to provide the basis for exchange. With the Inland Revenue (Amendment) (No. 2) Ordinance 2017 effective from July 1, 2017, Hong Kong will conduct AEOI with 75 reportable jurisdictions.

Contact Us
If you have further queries, don’t hesitate to contact Tannet anytime, anywhere by simply visiting Tannet’s website www.tannet-group.net, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143512 or 86-755-82143181 or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.

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