Chong Hing Bank - Common Reporting System (CRS) / Automatic Exchange of Financial Account Information (AEOI)

Common Reporting System (CRS) / Automatic Exchange of Financial Account Information (AEOI)

Overview

FAQ

Glossary

Self-Certifications

Overview

Common Reporting System (“CRS”) / Automatic Exchange of Financial Account Information (“AEOI”) is a new system that enhances tax transparency and combat cross-border tax evasion by transmission of the identified reportable persons and their financial account information from Hong Kong to an overseas tax jurisdiction with which Hong Kong has entered into an AEOI agreement.

The Inland Revenue (Amendment) (No. 3) Ordinance 2016 (“the Amendment Ordinance”) has put in place a legislative framework for Hong Kong to implement CRS / AEOI. To deliver the commitment, Hong Kong will commence the first exchanges by the end of 2018.

According to the due diligence procedures set out in the Amendment Ordinance, to confirm your tax residence, self-certification would be required from you for all new accounts. As for pre-existing accounts (i.e. accounts opened before 1 January 2017), if Chong Hing Bank (“the Bank”) has doubt about your tax residence, the Bank will need to seek a self-certification from you to verify your tax residence.

If you have any doubt about your tax residence, you may consider seeking professional advice. Useful guidance may also be found in the website of Inland Revenue Department of Hong Kong (http://www.ird.gov.hk/eng/tax/dta_aeoi.htm) and Organisation for Economic Cooperation and Development (“OECD”) CRS portal (http://www.oecd.org/tax/automatic-exchange/ ).

Disclaimer

The information provided herein is for reference purpose only. It should not be considered as tax or legal advice. Chong Hing Bank Limited (“the Bank”) makes no warranty or representation of its accuracy or completeness and is not responsible for any error or omission, nor shall the Bank be liable for any loss or damage that results from reliance upon the information provided. You should seek your professional legal and/or tax advice specific to your own situation.

The Chinese translation is for ease of reference only. In case of any discrepancy between the English version and the Chinese version, the English version shall prevail to the extent of such discrepancy.

Frequently Asked Questions

Who will be the reportable persons for AEOI?
Chong Hing Bank (“the Bank”) will identify the financial accounts held by individuals or entities or controlling person liable to tax by reason of residence in the AEOI partner jurisdictions. The Bank will collect and furnish to the Inland Revenue Department of Hong Kong (“IRD”) information of the identified account holders and the financial account information on an annual basis. IRD will then transmit the information to the tax administration of the relevant jurisdiction(s) of which the account holder is tax resident.
I live in Hong Kong and pay tax in Hong Kong so why do I need to give my information to the Bank?
The Amendment Ordinance requires the Bank to apply due diligence procedures to collect all required information and documentation from account holders. To identify reportable persons, the Bank may ask you to complete self-certification for verification of your tax residence status. The Bank will be liable for reporting on financial accounts held by reportable persons. Hong Kong taxpayers who are not tax residents of any territory outside Hong Kong will not be reported.
How will I know whether or not I am a tax resident of an overseas jurisdiction?
In general, whether or not an individual or entity is a tax resident of a jurisdiction is determined by having regard to the person’s physical presence or stay in a place (say, whether over 183 days within a tax year) or, in the case of a company, the place of incorporation or where the central management and control of the entity lies. The fact that a person has paid taxes charged by a jurisdiction (say, value-added tax, withholding tax or capital gains tax) does not automatically render that person a tax resident of that jurisdiction.
If I am a reportable person, how can I know what information of my financial account that IRD has reported to other jurisdiction? Can I object to the financial institution for releasing my information to IRD?
The Amendment Ordinance imposes legal obligation on the Bank to establish and apply due diligence procedures to identify tax residents of territories outside Hong Kong for AEOI purpose and collect specified information for submission to IRD. The Bank is expected to observe requirements under the Personal Data (Privacy) Ordinance. For instance, the Bank should inform you of the purpose of use of the personal data for AEOI. The Bank should take all practicable steps to ensure the accuracy and security of the personal data. You are entitled to request access to and correction of your personal data. In case an individual refuses to allow the Bank to release his personal data for AEOI purpose, the Bank may have to consider whether or not the account should be maintained.
What information must I provide to the Bank?
Information includes:
1. Name
2. Jurisdiction of Incorporation or Organisation (for entity only)
3. Identification Number / Business Registration Number
4. Address
5. Date of birth (for individual only)
6. Place of birth (for individual only)
7. Entity Type (for entity only)
8. Controlling Person (for passive non-financial entity only)
9. Jurisdiction of residence
10. Taxpayer identification number (TIN)
I am a Hong Kong permanent resident and do not hold any foreign passports and only have tax liability in Hong Kong. Do I need to provide a self-certification to the Bank when opening a new account? Do I need to provide a self-certification to the Bank for my pre-existing accounts?
According to the due diligence procedures set out in the Amendment Ordinance, which are based on the international standard required, account holders have to provide self-certification to the Bank in respect of their personal information, including tax residence, for all new accounts. For pre-existing accounts, the Bank will be required to conduct due diligence procedures to identify and verify the tax residence of the account holders. In case of doubt, self-certification from account holders will be sought.
I am a Hong Kong permanent resident and do not hold any foreign passports and only have tax liability in Hong Kong. Will my information be reported by the Bank to other jurisdictions under the AEOI regime?
If you are not a tax resident in any territory outside Hong Kong, the Bank is not required and should not report your financial account information to IRD for transmission to any tax administration outside Hong Kong.
I stay and work full-time in Country A, while my spouse is a Hong Kong permanent resident and works in Hong Kong. We have maintained a joint account in the Bank. Will the Bank need to declare my spouse’s information to IRD for onward transmission to the tax authority of Country A if Hong Kong signed an AEOI agreement with Country A in future?
If you are a tax resident of Country A in accordance with its tax law, the Bank will report information in the joint account (in entirety, with no apportionment) to IRD for transmission under AEOI to the tax administration of Country A. The Bank is not required to report the information of your spouse who is not a tax resident in any territory outside Hong Kong.
I am a Hong Kong permanent resident and live and work in Hong Kong. I bought a property for self-residence in Country B and hold an account in the Bank. Will the Bank need to provide my financial account information to IRD for transmission to the tax authority of Country B if it becomes an AEOI partner of Hong Kong?
Provided that you are not a tax resident of Country B under its tax laws, the ownership of a property in Country B and your liability to pay capital gains tax of Country B alone will not automatically render you a tax resident of Country B. Non-Hong Kong tax residents are advised to seek professional advice if in doubt.
What is “self-certification” and why must I provide it to the Bank?
Self-certification is a formal declaration that you make in connection with your tax residence. According to the due diligence procedures set out in the “Amendment Ordinance”, self-certification (including your “Jurisdiction of Residence”) would be required from you for all new accounts. As for pre-existing accounts (i.e. accounts opened before 1 January 2017), if the Bank has doubts about your tax residence, the Bank can seek a self-certification from you to verify your tax residence.
What if there are changes in circumstances that affect my tax residence?
You should advise the Bank of any change in circumstances which affects your tax residence status or causes the information contained in a self-certification to become incorrect or incomplete. Generally, you should provide the Bank with a suitably updated self-certification form within 30 days of such change in circumstances.
Are all banks in Hong Kong doing this?
Yes. According to the requirement of The Inland Revenue (Amendment) (No. 3) Ordinance 2016 (“the Amendment Ordinance”), all banks (except those exempted) in Hong Kong are required to implement the CRS / AEOI.
How will IRD safeguard my privacy and confidentiality of information exchanged?
IRD will exchange information with AEOI partners, which are only those with which Hong Kong has signed a comprehensive avoidance of double taxation agreement or tax information exchange agreement. Both treaties have provided for safeguards to protect taxpayers’ privacy and confidentiality of information exchanged as prescribed under the international standard. Such safeguards will apply to the information to be exchanged for AEOI purpose. In addition, the AEOI agreement provides that all information exchanged is subject to the confidentiality rules and data privacy safeguards. Should there be any breach of such rules or safeguards, Hong Kong may suspend the information exchange or terminate the AEOI agreement with the partner concerned.
Which countries are participating in the CRS / AEOI?
For a list of countries participating in the CRS / AEOI (together with the dates that they will start exchanging information), please refer to the website of OECD AEOI portal. The website address is:

Organisation of Economic Cooperation and Development
https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/crs-by-jurisdiction/

Glossary

Automatic Exchange of Financial Account Information “AEOI”
AEOI is a new system that involves the transmission of financial account information from Hong Kong to an overseas tax jurisdiction with which Hong Kong has entered into an AEOI agreement (or known as an “AEOI partner”). The information relates only to the tax residents of the jurisdiction of the AEOI partner.
Common Reporting Standard “CRS”
CRS is a worldwide information-gathering and reporting requirement for financial institutions, to help fight against tax evasion and protect the integrity of tax systems. Under the CRS, the Bank is required to determine where you are “tax resident” (this will usually be where you are liable to pay income or corporate taxes by reason of residence in a jurisdiction) and give Inland Revenue Department of Hong Kong information on those customers that are tax resident / paying taxes outside Hong Kong. This information may then be shared between different countries’ tax authorities.
The Organisation for Economic Co-operation and Development “OECD”
OECD is a group of member countries plus the European Commission and Brazil, China, India, Indonesia and South Africa as key partners.
Individual
A customer that holds a personal account or product with the Bank. Under the CRS, this also includes Sole Proprietorship.
Sole Proprietorship
Sole proprietorship is a type of business which is owned and run by one individual and where there is no legal distinction between the owner and the business.
Entity
This is defined under the CRS as a legal person or a legal arrangement, such as an organisation, partnership, corporation, trust or foundation. An entity will therefore include any customer that holds a business account, product or service with the Bank except sole proprietorship, who are treated as individuals under the CRS.
Controlling Person
This is a natural person who ultimately has a controlling ownership interest in the Entity. Where no natural person(s) exercises control through ownership interests, the Controlling Person(s) of the Entity will be the natural person(s) who exercises control of the Entity through other means. For a trust, the Controlling Persons are the settlor(s), the trustee(s), the protector(s) (if any), the beneficiary(-ies) or class(es) of beneficiaries, and any other natural person(s) exercising ultimate effective control over the trust
Self-Certification
A completed self-certification may be used to confirm your tax residence status under the CRS. The Bank has three types of self-certifications: individual, entity and controlling person. For some types of entity, besides collecting the entity self-certification, the Bank may also need to collect a self-certification from the controlling person(s). This is explained on the entities and controlling person self-certifications.
Tax Residence
Your tax residence is the country where you are resident / registered for tax purposes. Each country has its own rules for defining tax residence. For more information on tax residence, please consult your tax adviser or the OECD website.
Taxpayer Identification Number “TIN”
TIN is a unique combination of letters and / or numbers assigned to you / your entity. Some countries do not issue a TIN, but may rely on other issued numbers such as social security / insurance numbers (for individual) or company registration numbers for entities.

Frequently Asked Questions

Glossary

Self-Certifications for download