The case
Hong Kong Significantly Expands Its AEOI Network and Proposes Joining the Multilateral Convention
Early in June, the Hong Kong Legislative Council passed the Inland Revenue (Amendment) (No. 3) Bill 2017 which expands the list of Hong Kong’s reportable jurisdictions for Automatic Exchange of Information (“AEOI”) purposes from two to 75. This massive expansion will come into effect on 1 July 2017. Starting on 1 July 2017, Hong Kong financial institutions (“HK FIs”) will be required to identify, collect and report information of financial accounts held by tax residents of these 75 jurisdictions.
In addition, the Hong Kong Government is taking steps to join the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (“Multilateral Convention”). The Hong Kong Government proposes adopting a multilateral approach because “a bilateral approach to negotiations and amendments is no longer efficient or effective”. The Hong Kong Government has obtained the in-principle agreement from the Central People’s Government to extend the application of the Multilateral Convention to Hong Kong. Joining the Multilateral Convention will provide Hong Kong with a platform to exchange tax information under AEOI as well as other information exchange standards which are part of the OECD’s project against Base Erosion and Profit Shifting (“BEPS”). To enact the necessary legislative changes, the Hong Kong Government plans to introduce an amendment bill into the Legislative Council in October 2017.
Source: Baker McKenzie
The commentary
The bill that was passed by the Legislative Council on 7 June 2017 changed the definition of “reportable jurisdiction” so that it is no longer required that a reportable jurisdiction would be a party to a tax treaty or a tax information exchange agreement (TIEA) with Hong Kong. Instead, any jurisdiction that is specified as such in the Inland Revenue Ordinance (Schedule 17E, Part 1) would be considered as a reportable jurisdiction. In addition, the newly-enacted legislation added 73 jurisdictions to the list of reportable jurisdictions, which only included two jurisdictions (Japan and the United Kingdom) before this amendment.
The newly-added reportable jurisdictions are the following: Antigua and Barbuda, Argentina, Australia, Austria, Bahamas, Belgium, Brazil, Brunei Darussalam, Bulgaria, Canada, Cayman Islands, Chile, Mainland China, Colombia, Costa Rica, Croatia, Curacao, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Grenada, Guernsey, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Italy, Jersey, Korea, Kuwait, Latvia, Lebanon, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Montserrat, The Netherlands, New Zealand, Norway, Poland, Portugal, Qatar, Romania, Russia, Saint Vincent and the Grenadines, Saudi Arabia, Seychelles, Singapore, Slovak Republic, Slovenia, Spain, South Africa, Sweden, Switzerland, Turkey, United Arab Emirates, Uruguay and Vanuatu.
