The Government launched a consultation exercise on 24 April 2015, to gauge views on proposals to apply, with adaptations for Hong Kong, the prevailing international standards on the automatic exchange of financial account information in tax matters (AEOI).

On the basis of the Organisation for Economic Cooperation and Development (OECD) standard promulgated in July 2014, the Government has drawn up proposals to apply the AEOI requirements to Hong Kong through legislation. These proposals relate to the definitions of Financial Institutions (FIs), the types of information FIs have to secure from account holders, the due diligence and reporting requirements FIs have to follow, the powers of the Inland Revenue Department (IRD) to collect relevant information from FIs and forward such information to designated bilateral AEOI partners, the sanctions for non-compliance and confidentiality provisions.

Under the OECD standard, FIs include banks, custodians, insurance companies, brokers and investment entities (such as certain collective investment vehicles), unless they present a low risk of being used for evading tax and are excluded from reporting. FIs are required to identify and keep information of their non-Hong Kong tax resident account holders in accordance with the due diligence procedures prescribed in the OECD standard and report the relevant information of reportable accounts to IRD in prescribed format. For account holders who are tax residents of our AEOI partners, the IRD will pass the relevant information to the AEOI partners concerned on an annual basis.

The consultation paper is available on the website of the Financial Services and the Treasury Bureau (www.fstb.gov.hk/tb/en/consultation-paper.htm). The consultation will end on 30 June 2015. The consultation will end on 30 June 2015.