• Thu
  • Dec 18, 2014
  • Updated: 2:01pm
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.

 

Share

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive
 
 

 

 
 
 
 
 
29

This article is now closed to comments

DinGao
I hope the US has been sent a bill,for the all the legal and administrative work THEIR legislation has so far cost HK taxpayers and that they are in future billed each and every time they request information.Or waht does HK get in return; information in US banks in respect of HK tax evaders?
dynamco
at the same time can we give Mainland China details of all (black) properties held here by Mainlanders ready for the cut and run ?
rpasea
What is to stop banks in HK from refusing to take American citizens as customers? Does this apply to only personal accounts or to all accounts over which a US citizen has signatory powers (e.g. a company account)? The American police state extends its reach with the assistance of compliant govt. officials like ours....what's next, Article 23 legislation?
Dave196358
this is yet another reason why so many Americans are giving up their US citizenship.......
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?
xiaoblueleaf
US is one of very few countries which has a worldwide tax regime
of its citizens while US corporations' profits not repatriated back
to US are not taxable. Has the Secretary of Financial Services consider
the incremental costs of such administrative burden to our banks
in Hong Kong? The US goverment facing financial collapse is pulling
all trick to get money, and the HKSAR is mindless to comply. Isn't
HKSAR part of PRC which surely will not yield to Uncles Sam's
insideous queatvfor $$$
MingBaakMei
Overseas assets and overseas income of HK residents are not taxable in HK - so there is no need to get information from US, or any overseas bank. It keeps the Salaries Tax law simple and thus the completion of the tax form simple, with payment simple, plus easy to administer and thereby keeping the whole tax system operating at a low cost to the HK tax payer.
Be thankful for small mercies.
HK_eh!
that was why many private banking reject american customers, they don't want to deal with the extra costs/paperwork.
Less and less choices for Americans in global banking, will limit to the Bank of America, Citibank, etc.
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.
Sticks Evans
Protect Snowden but **** all the other Americans. NIce......

Pages

Login

SCMP.com Account

or