AUTOMATIC EXCHANGE

OF FINANCIAL ACCOUNT

INFORMATION (AEOI)

Candy Wong

Vice President, Client Services

Computershare Investor Services Limited

Welcome

House-keeping points

› Lines on mute

› Questions via instant messaging

› Questions will be answered at the end of presentation

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Agenda

1. OECD initiatives

2. Why Hong Kong

3. Who are affected

4. What are the obligations

5. What is the timetable

6. What is next

7. Questions & answers

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1. OECD

INITIATIVES

OECD initiatives

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What is AEOI? Why AEOI? What is Common

Reporting Standard (CRS)?

- A system involves the transmission of financial account information from Hong Kong to an overseas tax jurisdiction with which Hong Kong has entered into an AEOI agreement.

- Financial information only relates to the tax

residents of the jurisdiction of AEOI partners.

Hong Kong

An overseas AEOI partner

In July 2014, Organisation for Economic Co-operation and Development (OECD)

issued CRS and called jurisdictions to participate in AEOI. As at 9 May 2016, more than 100 jurisdictions over the world committed to the implementation of AEOI.

OECD initiatives

Q&A

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OECD initiatives

Q1: Do you know who are AEOI Partners of HK as at today?

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› IRD Press Release: http://www.ird.gov.hk/eng/ppr/archives/16102601.htm

Example:

Hong Kong

An overseas AEOI partner

Account Holder Mr. A - tax resident in Japan

Japan Tax Authority

HK IRD

HK Bank X

OCED initiatives

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What is AEOI? Why AEOI? What is Common

Reporting Standard (CRS)?

To exchange of information for tax purposes which can enhance tax transparency and combat cross-border tax evasion. It is similar to FATCA.

Enhance tax transparency Combat cross-border tax evasion

OCED initiatives

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What is AEOI? Why AEOI? What is Common

Reporting Standard (CRS)?

It refers to the Standard for Automatic Exchange of Financial Account Information issued by OECD to ensure consistency in exchange of financial account information.

2. WHY

HONG KONG?

Why Hong Kong › Members of the international community advocated AEOI as efficient mode

of international tax cooperation and have made it a new global standard.

› As a responsible international citizen and a leading financial centre, Hong

Kong indicated in September 2014 our commitment to implement AEOI and

commence the first information exchanges by the end of 2018.

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Why Hong Kong

AEOI Development in Hong Kong

April 2015

October 2015

January 2016

June 2016

The Inland Revenue

(Amendment) (No. 3) Ordinance

2016 (IRO) was affected for

implementation of AEOI

in Hong Kong

The Amendment Bill

was presented to

LegCo

HKSAR Government

issued consolidated

responses to the

consultation paper.

HKSAR Government

issued a consultation

paper on AEOI

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Why Hong Kong

Inland Revenue (Amendment) (No.3) Ordinance 2016 sets out mainly:

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Definition of

Reporting FI,

Returns by

Reporting FI

Excluded

Accounts (e.g.

retirement and

pension

account)

Non-reporting

FI (e.g.

Central Bank,

Government

Entity)

Reportable

Jurisdictions

Penalties for

offences (fine

and

imprisonment)

Due Diligence

Requirements

(pre-existing

accounts &

new accounts)

1 2 3

4 5 6

3. WHO ARE

AFFECTED?

Who are affected

Q&A

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Who are affected

A financial institution resident in Hong Kong is required to identify financial accounts held by tax residents in the AEOI partner jurisdictions.

Definition of financial institution under the IRO (briefly below)

Custodial institution: an entity that holds as a substantial

portion of its business, financial assets for the account of

another individual or entity.

Depository institution: an authorized institution as

defined by section 2(1) of the Banking Ordinance

(Cap.155) or an entity that accepts deposits in the

ordinary course of a banking business or similar business.

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Who are affected

Investment entity: includes but not limited to certain

corporations licensed under the Securities and Futures

Ordinance (SFO) to carry out certain regulated activities;

and collective investment schemes authorized under the

SFO.

Specified insurance company: includes but not

limited to an insurer authorized under the Insurance

Companies Ordinance (Cap.41).

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Who are affected

Definition of financial account under the IRO (briefly below)

** Please refer to the IRO for detailed definition of financial

institution and financial account.

› a custodial account

› a depository account

› any equity interest or debt interest in the

financial institution

› any cash value insurance contract and any

annuity contract

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4. WHAT ARE

THE

OBLIGATIONS?

What are the obligations The AEOI Process

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Step 1 Step 2

Step 3 Step 4

Step 5 Reporting Financial Institutions

Financial Accounts

Reportable Accounts

Due diligence procedures

Report the Relevant information

Review their

And then

By applying To identify

What are the obligations Identify who are…..

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“Tax residents of reportable jurisdictions” generally refers to those who are liable to tax by reason of residence in the jurisdictions with which Hong Kong has entered into an AEOI arrangement. IRD Guidance:

Tax residents of reportable jurisdictions

?

For individual, his physical presence or stay in a place (say, whether over 183 days within a tax year)

For company, place of incorporation or where management control entity lies

Depends on the tax law of the jurisdictions

For details of tax laws of different jurisdictions, please refer to OECD’s portal.

What are the obligations Due diligence and self-certification

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Pre-existing Accounts (HK$) New Accounts (HK$)

Low value accounts (≤$7.8 million)

- Electronic search

High value accounts (>$7.8million) - Electronic search, paper search

and RM enquiry Self-certification if necessary

Individual Accounts

Balance ≤$1.95million - Not subject to review

Balance >$1.95million - Electronic search, paper search

and RM enquiry

Self-certification if necessary

Entity Accounts

No threshold

Self-certification from all holders

Reasonable test on self-certification by FI (based on KYC/AML documents)

No threshold Self-certification from all holders Reasonable test on self-certification

by FI (based on KYC/AML documents)

What are the obligations Due diligence and self-certification

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Pre-existing Accounts (HK$) New Accounts (HK$)

No threshold

Self-certification from all holders

Reasonable test on self-certification by FI (based on KYC/AML documents)

Individual Accounts

No threshold Self-certification from all holders Reasonable test on self-certification

by FI (based on KYC/AML documents)

Entity Accounts

Low value accounts (≤$7.8 million)

- Electronic search

High value accounts (>$7.8million) - Electronic search, paper search

and RM enquiry Self-certification if necessary

Balance ≤$1.95million - Not subject to review

Balance >$1.95million - Electronic search, paper search

and RM enquiry

Self-certification if necessary

What are the obligations Due diligence and self-certification

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Self certification forms to whom? When to get the self certification forms?

Individual Entity Controlling persons of passive

non-financial entity

Upon account opening

In special circumstances, get it within 90 days after the account is opened.

What are the obligations Due diligence and self-certification

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Self certification forms should be……

Retention of documents…..

Signed and dated

Any change in tax residency, holders to inform the reporting FI within 30 days

6 years

What are the obligations Due diligence and self-certification

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Wider approach to collect information

FI can capture and maintain tax residence of tax holders irrespective of whether the account holder is a reportable person Benefits Cater for more AEOI Partners Enable FIs to collect more information in one-go

What are the obligations Reporting requirements

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Individual account holder/controlling persons

- Name

- Address

- Jurisdiction of tax residence

- Taxpayer identification number (TIN or equivalent)

- Date of birth

- Place of birth (Optional)

2017 onwards

In respect of Account details to be reported Year to 31 Dec

- Name

- Address

- Jurisdiction of tax residence

- TIN

Entity account holder

Account Number

Account balance or value

- Custodial accounts: Total gross amount of interest, dividends, proceeds from the sale or redemption of financial assets

- Depository accounts : Total gross amount of interest paid to account

- Other accounts: Total gross amount paid to account

What are the obligations

Q&A

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What are the obligations Terms and explanations

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- Collect information from FI - Access the operation system of FI - Direct FI to rectify their AEOI system - Issue search warrants Offences, e.g.

Sanctions

IRD Powers

?

- FIs who fail to make returns - FIs with intent to defraud, provide return which is misleading, false or inaccurate

in a material particular - Holders who provide incorrect returns

What are the obligations

Q&A

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What are the obligations Terms and explanations

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Offences

Sanctions

IRD Powers

Q6: If breach, penalties on whom? Answer: Penalties can be imposed on: - Reporting FI - Service Providers engaged to fulfill due diligence and reporting requirements - Employees or persons engage to work - Account Holders who provide false or incorrect in material particular

Fine and imprisonment

Fine A fine at Level 3 to 5 Imprisonment From 6 months to 3 years

?

5. WHAT IS

THE

TIMETABLE?

What is the timetable

Date

2017 Due diligence procedures in place to collect relevant information

July 2017 Start of AEOI registration through IRD Portal

May 2018 Submission of AEOI returns

Sept 2018 First exchange with AEOI partners

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6. WHAT IS

NEXT?

What is next

Assess

• whether AEOI has impact on your company

Discuss

• with tax advisor if necessary

Plan

• ahead resources (manpower, training, IT support)

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What is next How can Computershare help?

Due diligence on accounts

Collect information from holders (self - certification form)

Compile reports for your reporting to IRD

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Useful information

Press Release – Inland Revenue (Amendment) (No. 3) Ordinance 2016 came into effect (30 June 2016)

http://www.ird.gov.hk/eng/ppr/archives/16063001.htm

Inland Revenue (Amendment) (No. 3) Ordinance 2016

http://www.gld.gov.hk/egazette/pdf/20162026/es12016202622.pdf

Frequently Asked Questions on AEOI

http://www.ird.gov.hk/eng/faq/dta_aeoi.htm

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THANK YOU!

Q & A

› Please submit your text

questions and comments

using the Questions Panel.

This communications is for information only and not intended to be used as tax advice. It is not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under the IRO.

以上資料僅供參考用途，而非作為稅務建議。此資料亦非納稅人用於逃避稅務局所要求之稅務罰款的依據。

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