Us Hong Kong Tax Information Exchange Agreements

The main difference between the provisions of the IEI between a TIEA and a CDTA is that a TIEA tends to ask more specific questions as part of the practical implementation of information exchange. For example, the HK-US TIEA has provided a list of information that the applicant must provide in its IOA applications and contains provisions to which the contracting party must terminate for the exchange of information. In June 2015, the OECD`s Tax Affairs Committee (CFA) approved a standard protocol on the agreement. The standard protocol can be used by jurisdictions if they wish to extend the scope of their existing TIEAs to the automatic and/or spontaneous exchange of information. Hong Kong recently passed the 2013 Inland Revenue Bill (the “Bill”) on July 10, 2013. This allows the city to agree with another judicial exemption from double taxation, as well as with the exchange of tax information imposed by Hong Kong or other jurisdiction. Thus, under the bill, Hong Kong can now enter into a joint tax information exchange agreement (“TIEA”). The aim of this agreement is to promote international cooperation in tax matters through the exchange of information. It was developed by the OECD Global Forum Working Group on Effective Information Exchange. Jurisdictions can also use the text of the articles in the model protocol if they wish to include the automatic and spontaneous exchange of information in a new TIEA. The agreement was born out of the OECD`s work on combating harmful tax practices. The lack of effective exchange of information is one of the main criteria for determining harmful tax practices. The agreement is the standard for the effective exchange of information within the meaning of the OECD`s initiative on harmful tax practices.

In this regard, legal systems may be based on a bilateral agreement between the competent authority for the implementation of the automatic exchange of information in accordance with the common standard of notification or automatic exchange of reports by country on a TIEA, particularly in cases where it is not (yet) possible to automatically exchange information through the relevant authority within the framework of a relevant multilateral agreement. On March 25, 2014, Hong Kong and the United States signed an Agreement on the Exchange of Tax Information (TIEA). The agreement is the first of its kind to be signed by Hong Kong and allows the free exchange of tax information on demand between Hong Kong and the United States. HK-US TIEA will provide Hong Kong with the necessary legal basis to provide, at the request of the United States, certain information that will be disclosed to the United States by Hong Kong financial institutions, in accordance with the Foreign Account Tax Compliance Act (FATCA) which will come into effect on July 1, 2014. Following TIEA, Hong Kong is in talks with the United States to conclude an intergovernmental agreement (IGA) to facilitate compliance with FATCA by Hong Kong`s financial institutions.

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