On February 2, 2018, the Hong Kong Special Administrative Region officially formalized the process of ratifying the OECD’s Multilateral Competent Authority Agreement (MCAA). That means that the jurisdiction will join soon the existing multilateral network of data exchange between the tax authorities of many countries and territories around the world.
The Hong Kong Tax and Fees Department introduced the Ordinance on Automatic Exchange of Information on Financial Accounts (AEOI), which will optimize the process of obtaining information by the countries with which the jurisdiction agrees to exchange. This refers to the exchange both under the Common Reporting Standard (CRS) and the intercountry reporting exchange under the BEPS Plan.
After joining of Hong Kong the Multilateral Agreement, the authorities of the country will be able to pass a rather formal procedure for finalizing the relations with other participants through the OECD secretariat.
If we compare this process with the conclusion of separate bilateral agreements with a number of the countries, it is much faster and easier.
It is important to note that until the end of this year, the old (bilateral) rules for automatic exchange will remain in force in Hong Kong, and the new obligations will come into effect on January 1, 2019. Thus, the local financial institutions still have time to prepare and bring their internal control and reporting process in line with the new rules to be able to exchange the information for 2019 at the end of 2020.
