Hong Kong (China) received an overall rating of Largely Compliant in its assessment against the international standard of exchange of information on request (EOIR) handled over the period from 1 October 2014 to 30 September 2017. Its legal framework is generally in line with the international standard, notably with recent improvements made on access to information and the extensive extension of its network of exchange partners. Hong Kong (China) has responded reasonably well to the steep increase in requests for information in the review period.
As an international financial centre, Hong Kong has all along been supportive of the international efforts to enhance tax transparency and combat tax evasion. Since the first round of the Peer Review, Hong Kong has made significant progress in enhancing its EOI regime and pursuing the recommendations made in the review reports.
Specifically, Hong Kong has introduced a new requirement under the Companies Ordinance that every company incorporated in Hong Kong has to obtain and maintain up-to-date beneficial ownership information by keeping a significant controllers register. Hong Kong has also amended the Anti Money Laundering and Counter-Terrorist Financing Ordinance to introduce a licensing regime for trust or company service providers (TCSPs) and extend the statutory customer due diligence and record-keeping requirements to cover designated non-financial businesses and professions, namely lawyers, accountants, estate agents and TCSPs. All these have come into operation since March 2018, and served to further enhance the transparency of beneficial ownership in Hong Kong.
As regards tax information exchange network, the application of the Convention on Mutual Administrative Assistance in Tax Matters (the Convention) was extended by the People’s Republic of China to the Hong Kong Special Administrative Region in May 2018. The Convention entered into force in Hong Kong in September 2018, enabling it to exchange tax information with all participating jurisdictions. Further, since the completion of the first round of the Peer Review in 2013, Hong Kong has signed 18 new Double Taxation Agreements and Tax Information Exchange Agreements, all of which are now in force. Hong Kong’s EOI network has greatly expanded, with a substantial increase of EOI partners from 29 to 128.
However, some improvements are now required to ensure the availability of beneficial ownership information on all the entities and legal arrangements and to continue to ensure that the new obligation on companies to maintain a register of significant controllers is well monitored in practice. Hong Kong should also take measures to ensure that obligations to maintain reliable accounting records by all relevant entities and arrangements (including those solely earning non-taxable income) are satisfactorily enforced.
For a deeper understanding of the Peer Review Report, please refer to this document for additional details.
