Hong Kong announces plans for a Crypto-Asset Reporting Framework by 2026, aiming to enhance tax transparency and combat tax evasion.
The Hong Kong government has announced its plan to implement the Crypto-Asset Declaration Framework, aiming to improve international tax transparency and fight cross-border tax evasion. This commitment was made recently in preparatory consultations with the OECD Global Forum on Transparency and Effective Exchange of Information in Tax Matters.
It has been made in the wake of increasing market size in the sector of crypto-assets. An international reporting framework was launched in June 2023 to ensure worldwide tax transparency at the OECD level. This framework is based on the Common Reporting Standard for the Automatic Exchange of Financial Account Information. This will allow the sharing of information on annual cryptocurrency accounts and transactions. Consequently, it will help different jurisdictions exchange tax information.
Hong Kong Plans Crypto Reporting Framework by 2026, First Exchange by 2028
The International Centre for Tax Residence has urged all the relevant territories, including Hong Kong, to adopt the Global Forum’s framework. It has been made to increase awareness of common and transparent taxation policies across the globe.
The importance of the framework was echoed by the Secretary for Financial Services and the Treasury, Mr. Hui Ching-yu. Further, he said that it is crucial to preserve the position of the city as an important global financial hub. It also strengthens the position of Hong Kong as a responsible taxation territory that cooperates within the framework of international taxation.
Hong Kong intends to apply the framework with suitable partners of reciprocity. These partners will have data confidentiality and security requirements met. It plans to finish local legislative changes by 2026, while the first information exchange should happen automatically by 2028.
Mr. Hui further stated that the government will engage stakeholders and the public before the enactment of the legislative alterations. This approach will allow for a comprehensive review of all efforts in the process. As a result, it will ensure that all views are considered.
Hong Kong has been following the principles of international tax transparency even before the beginning of the crisis. It has then exchanged financial account information on an annual basis with partner tax jurisdictions since the year 2018. The information is useful for making various assessments by tax authorities and for identifying cases of tax fraud.
