Hong Kong law on automatic exchange of tax information goes into effect

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Hong Kong’s Inland Revenue Department announced September 9 that tax legislation that provides for automatic exchange of financial account information (AEOI) entered into effect on June 30.

The Inland Revenue Department also released guidance designed to assist financial institutions with their reporting obligations under the new legislation.

The new law allows Hong Kong to comply with obligations under AEOI agreements with other nations.

The legislation requires financial institutions to provide information on financial accounts accounts held by tax residents of reportable jurisdictions to Hong Kong’s tax authority. The information is then exchanged, on an annual basis, with tax authorities of jurisdictions with which Hong Kong has signed an AEOI agreement. Hong Kong will, in turn, receive tax information about its residents from the other jurisdictions.

The AEOI scheme is designed to help tax authorities detect tax evasion.

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