Clifford Chance
Hong Kong and USA conclude tax agreements
15 May 2014
Hong Kong has recently signed its first standalone tax information exchange agreement (TIEA) with the United States of America (HK-United States TIEA). It is the first TIEA signed by Hong Kong with the government of a foreign territory since amendments to Hong Kong's Inland Revenue Ordinance came into force in July 2013 allowing the exchange of tax-related information with other jurisdictions under comprehensive avoidance of double taxation agreements and TIEAs. The HK-United States TIEA, operative on 20 June 2014, puts into practice international tax exchange information standards to enhance tax transparency and prevent tax evasion that were recommended be adopted by Hong Kong by the Organization for Economic Cooperation and Development.
In addition, within the past week, Hong Kong and the United States have substantially concluded an intergovernmental agreement (IGA) that will reduce the reporting burden under the US Foreign Account Tax Compliance Act (FATCA) and facilitate compliance by financial institutions in Hong Kong. FATCA is a US tax law requiring financial institutions outside the US to report financial account information of US taxpayers to the US tax authorities. The IGA and the Hong Kong TIEA will complement each other with the aim of avoiding tax evasion locally and overseas.
