EU explores exchange of tax information

The European Union is exploring how to get access to information about bank accounts its residents hold in Hong Kong as the city moves towards legislation that will help it comply with international tax governance standards.

The EU is also fine-tuning a savings directive among member nations that would mean relevant tax information is sent automatically between them, a source said.

Philip Kermode, the European Commission's director responsible for analyses and tax policies, met government officials from the Financial Services and the Treasury Bureau yesterday. The government is working on a bill that would allow the Inland Revenue Department to send information on individuals suspected of evading taxes to authorities overseas. This would allow Hong Kong to incorporate the Organisation for Economic Co-operation and Development (OECD) standard on exchanges of information in its double-taxation treaties. Hong Kong was the first major financial hub in the region to make such a move.

Adopting the OECD's international standard for the exchange of tax information generally means jurisdictions cannot refuse to share information because the data is held by banks or because a particular type of income is not taxed.

The city has already signed double-taxation treaties with the mainland, Thailand, Belgium, Luxembourg and Vietnam.