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The Exchange of Tax Information Portal is an initiative of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Global Forum conducts peer reviews of its member jurisdictions' ability to co-operate with other tax administrations in accordance with the internationally agreed standard. The standard provides for exchange of information on request where it is foreseeably relevant to the administration and enforcement of the domestic tax laws of the requesting jurisdiction. Effective exchange of information requires that jurisdictions ensure information is available, that it can be obtained by the tax authorities and that there are mechanisms in place allowing for the exchange of that information. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2). The EOI Portal will track the development of these peer reviews, including changes that jurisdictions make in response to the Global Forum's recommendations.

Peer Review: Peer Review Report Phase 1 Legal and Regulatory Framework - Hong Kong, China

This report for Hong Kong, China has been published on 26 Oct 2011. You can buy this report, or browse it online below.

Skip directly to the Executive Summary. You may also want to view the tables of determinations and ratings.


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Determinations and Recommendations

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Nominees that are not subject to AML obligations (i.e. those other than lawyers or financial institutions) are not required to maintain ownership and identity information in respect of all persons for whom they act as legal owners.  An obligation should be established for all nominees to maintain relevant ownership information where they act as the legal owners on behalf of any other persons. 
While there are no share warrants to bearer in circulation at present, there are currently insufficient mechanisms in place that ensure the availability of information allowing for identification of their owners.  Hong Kong should continue to take necessary steps to ensure that robust mechanisms are in place to identify the owners of share warrants to bearer or eliminate companies’ ability to issue such shares. 
Not all trustees of private express trusts and foreign trusts are statutorily required to have information available on the identity of settlors and beneficiaries of trusts.  Hong Kong should ensure that information that identifies the settlors, trustees and beneficiaries of private express trusts and foreign trusts in respect of which a trustee is resident in Hong Kong, is available to its competent authority. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.   Trustees of private express trusts and foreign trusts are only statutorily required to maintain accounting records where the trust is carrying on business in Hong Kong.  Hong Kong should ensure that trustees of private express trusts and foreign trusts maintain accounting records even where the trust is not carrying on business in Hong Kong. 
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Hong Kong has a domestic tax interest requirement with respect to 3 of its 21 exchange of information partners.  Hong Kong should continue its efforts to ensure that its competent authority has the power to obtain all relevant information with respect to all exchange of information agreements (regardless of their form). 
Hong Kong’s access powers for the agreements which it has, and will, update in line with its commitment to the standard, are only applicable to requests made under double tax conventions.  Hong Kong should ensure that its competent authority has the power to obtain all relevant information pursuant to requests under all exchange of information agreements (regardless of their form). 
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Five of Hong Kong’s 21 DTCs do not provide for effective exchange of information.  Hong Kong should continue its efforts to renegotiate its agreements as necessary so that they provide for effective exchange of information. 
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Hong Kong has 16 signed agreements (6 of which are currently in force) which provide for effective exchange of information.  Hong Kong should bring its existing agreements that do not meet the standard up to the standard. 
Hong Kong has been approached by at least one jurisdiction to negotiate a TIEA. Furthermore, recent amendments to its domestic law to allow for exchange of information in the case of DTCs do not extend to TIEAs or other information exchange arrangements.  Hong Kong should enter agreements for exchange of information (regardless of their form) with all relevant partners, meaning those partners who are interested in entering into an information exchange arrangement with it. 
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.