A move by US tax officials to target 'secret' HSBC bank accounts in India should be seen as a warning shot across the bows of all Hong Kong banks, a tax expert warns.
Two weeks ago the US Department of Justice accused HSBC staff of telling US clients of Indian origin that they would not have to pay US tax on so-called Non-Resident Indian (NRI) accounts they opened with the bank.
HSBC says it had not seen the summons, but 'fully supports the US efforts to promote appropriate payment of taxes by US taxpayers'.
This comes on the back of two US-backed initiatives geared to tighten the economic noose on banks involved in illegal financial activities in Hong Kong.
One is the Foreign Account Tax Compliance Act (Fatca) and the other is a US Internal Revenue Service (IRS) tax amnesty launched two years ago, which will bring banks in the city under increasing scrutiny. A tax lawyer said these developments would have banks in the city nervously looking over their shoulder.
'It could be any day that a major financial institution in Hong Kong comes under the same scrutiny as what has happened to HSBC in India,' said Jay Krause, partner at law firm Withers. 'The US Department of Justice and IRS officials have said they have a number of these investigations ongoing, so just watch this space. They are going to be actively pursuing these organisations.
