The Bank of East Asia

Insurance & MPF Services

AEOI related to MPF/ORSO Registered Schemes

Overview

Released by the Organisation for Economic Co-operation and Development (“OECD”) in July 2014, the Common Reporting Standard (“CRS”) is an international standard on how financial institutions collect and report relevant financial account information to their local tax authorities for the purpose of automatic exchange of financial account information in tax matters (“AEOI”), aiming to enhance tax transparency, combat cross-border tax evasion, and protect the integrity of taxation systems.

As a responsible international citizen and a leading financial center, Hong Kong indicated in September 2014 our commitment to implement AEOI and commence the first information exchanges by the end of 2018. To deliver the commitment, Hong Kong commenced the first exchanges in September 2018.

The Inland Revenue (Amendment) (No. 3) Ordinance 2016, which commenced operation on 30th June, 2016, has put in place a legislative framework for Hong Kong to implement AEOI. Subsequently, further amendments were made to the AEOI legal framework under the Inland Revenue (Amendment) (No. 2) Ordinance 2017, the Inland Revenue (Amendment) Ordinance 2018 and the Inland Revenue (Amendment) (No. 2) Ordinance 2019. The above Amendment Ordinances are collectively referred to as “the AEOI legislation”.

Pursuant to the Inland Revenue (Amendment) (No.2) Ordinance 2019, Mandatory Provident Fund Schemes registered under the Mandatory Provident Fund Schemes Ordinance (Cap. 485) (“MPF schemes”) and Occupational Retirement Schemes registered under the Occupational Retirement Schemes Ordinance (Cap.426) (“ORSO registered schemes”) (collectively “Retirement Schemes”) will become reporting financial institutions with effect from 1st January, 2020, in which the Retirement Schemes are required to comply with the due diligence and reporting obligations relating to AEOI.

 

Who will be the reportable persons for AEOI?

Under the AEOI legislation, a financial institution resident or with a branch located in Hong Kong is required to identify the financial accounts held by individuals or entities liable to tax by reason of residence in the reportable jurisdictions. The financial institutions will collect and furnish to the Inland Revenue Department (“IRD”) information of the identified account holders, and where relevant, controlling persons1 and the financial account information on an annual basis. IRD will then transmit the information to the tax administration of the relevant jurisdiction of which the account holder or controlling person is tax resident.

If members and/or employers of the Retirement Schemes concerned are tax residents of the reportable jurisdictions, such Retirement Schemes will need to report in 2021 for the first time to the IRD the financial account information of the relevant persons, covering the year 2020, for transmission to the relevant tax authorities.

For identification of the tax residency status of each new account holder, reporting financial institutions are required to collect a self-certification2 of the account holder for verification of their tax residency status and to kept it for a period of six years (beginning on the date on which the return is furnished) in accordance with the requirement of the Inland Revenue Ordinance.

Employers should take all practical steps to request new employees to complete, sign and submit the self-certification2 forms properly and promptly when enrolling these new employees into MPF schemes and ORSO registered schemes. Otherwise, account opening process will be adversely affected and could not be completed.

For information regarding the tax laws of different jurisdictions in defining tax residence, you can visit the OECD’s AEOI portal. If you have any specific questions regarding tax residency and the implementation of AEOI, please consult your tax advisor.

For further details on the implementation of AEOI related to MPF/ORSO registered schemes, please refer to the Frequently Asked Questions.

 

Remarks:

  1. For the meaning of “controlling persons”, please refer to the definition of “controlling person” under Section 50A(1) of the Inland Revenue Ordinance (Cap. 112).
  2. Self-certification is a formal declaration that the account holder provides in connection with his/her tax residence under the AEOI regime.