On March 13, 2019 the Government of the Hong Kong welcomed the decision of the European Union to exclude Hong Kong from its watch list on tax cooperation.
In 2017 and 2018, the EU included 68 tax jurisdictions, including Hong Kong, on its watch list, and monitored the progress of these jurisdictions in implementing the requirements of international tax cooperation.
Secretary for Financial Services & the Treasury James Lau said that Hong Kong has always supported and facilitated the efforts of the international community to increase tax transparency and combat cross-border tax evasion. Since 2018, Hong Kong has implemented various initiatives related to international tax cooperation, and fulfilled the commitments made to the EU and the EU decision shows that Hong Kong’s compliance with international tax cooperation standards is recognized by the international community.
Initiatives implemented by Hong Kong include the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which entered into force on September 1, 2018. This allows Hong Kong to effectively implement the automatic exchange of information on financial accounts on tax matters (AEOI) and the Base Erosion and Profit Shifting Package announced by the OECD.
The first exchanges within AEOI with the relevant jurisdictions went smoothly in September and October 2018.
The Internal Revenue (Amendment) (No. 6) Bill 2017 and the Internal Revenue (Profits Tax Exemption for Funds) (Amendment) Bill 2018 change tax regimes for corporate treasury centers, professional reinsurance, captive insurance, offshore funds and offshore private equity funds by expanding the coverage of relevant tax incentives from external operations to domestic operations in order to meet international requirements.
