• Sat
  • Aug 23, 2014
  • Updated: 1:27pm
NewsHong Kong
Tax

Hong Kong agrees to hand over financial details of Americans working in city to US tax authorities

Under Foreign Account Tax Compliance Act, US can ask for data if certain conditions are met

PUBLISHED : Wednesday, 26 March, 2014, 5:00am
UPDATED : Wednesday, 26 March, 2014, 10:36am

Hong Kong tax officials will soon be able to pass information about the finances of Americans working in Hong Kong to their US counterparts under an agreement signed yesterday as part of Washington's global crackdown on tax evasion.

The Financial Services and Treasury Bureau said the tax-information exchange agreement allowed the US to file a request to the Inland Revenue Department "under specified conditions".

The bureau said that provided the basis for a further agreement that would enable US tax authorities to seek information directly from local banks.

Tax experts said the agreement was crucial for America's controversial anti-tax evasion law, which takes effect later this year.

The Foreign Account Tax Compliance Act was passed in 2010. It takes effect in July. It requires foreign financial institutions such as banks to declare to the US tax authorities the foreign holdings of anyone liable under US tax rules.

If the institutions did not comply, the US tax authorities would withhold 30 per cent of their US-sourced income, according to Ivan Strunin, managing director of Deloitte's Asia Pacific International Core of Excellence (US Tax Service).

Without an intergovernmental agreement, financial institutions that provided the information might breach privacy laws.

Signed into law by President Barack Obama in 2010, the law was originally supposed to take effect on January 1 last year. That was postponed to January 1 this year and then to July 1.

Secretary for Financial Services and the Treasury Professor Chan Ka-keung said after signing the first agreement with US Consul General Clifford Hart that it demonstrated Hong Kong's continued commitment to fulfilling its international obligations.

"The [agreement] with the US has adopted highly prudent safeguard measures to protect taxpayers' privacy and the confidentiality of information exchanged," he said.

For the agreement to take effect, the Chief Executive in Council will have to make an order under the Inland Revenue Ordinance. The order will take effect unless the Legislative Council objects to it.

The Post reported earlier that Cathay Pacific planned to comply with the US law. Cathay pilots said they were concerned about privacy and were puzzled why companies in Hong Kong needed to comply with the regulations of a foreign country.

"How can Cathay give a foreign government our details without our permission? There is a good case [that this is] against Hong Kong [privacy] law," one American pilot said.

 

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This article is now closed to comments

dynamco
www.scmp.com/news/hong-kong/article/1458347/china-likely-seek-personal-tax-details-worldwide-say-analysts
great ! the sooner the better
let the Mainland authorities seize all the black money property here and put them back on the market at a realistic rate
CatherineOhlLaw
complain complain, how do you think I felt , as a French citizen with no connections to the US when my HK bank made me sign a form authorizing the us tax authorities to have my info or they wouldn't open a bank account in my name. now that's imperialism !
whatever
While many are moaning and whining, the fact is that laws like this are going to become the norm throughout many nations in the next few years. A European-FATCA law is already being discussed and don't be surprised if in the next ten years you see many nations adopting money-laundering / reporting laws and regulations based on the FATCA concept.
mercedes2233
What about US citizens in other countries, including Cuba, Mexico, Russia etc? Do those governments send similar information to the US? Somehow I doubt it. And does the US pay for the administrative costs involved? If not, why not?
tksiow
Would suggest you move to these countries,especially Russia.
impala
If they have signed a FATCA-compliant DTA, then yes they do. Most of the (developed) world certainly has.
pgrath1
The USA will soon be bankrupt. The US government pays 26% of tax revenue on debt-interest alone. it needs all the money it can get, and Americans overseas will not be allowed to escape.
impala
And where did you read that? Hello! Magazine? The US spent about USD 250bn on interest expense in its 2013 budget, or about 6.5% of the total budget. The amount was nearly identical in the 2012 budget, and will be even lower in the 2014 budget.

Expressed in Federal tax revenues of about 2.9 trillion, interest expense amounts to about 8.6%. So perhaps you'd like to check your facts before you spout nonsense.
ejmciii
Drinking too much of that Beijing Kool-Aid, son. The US seems not to have any problem selling debt instruments with a negligible interest rate, including to the masters in Beijing who essentially park their money for little to no return. That kind of creditworthiness in the eyes of the international investment community bespeaks being close to bankruptcy in your little brain?
Dave196358
this is yet another reason why so many Americans are giving up their US citizenship.......

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