The Hong Kong government has committed to implementing a mandatory crypto asset reporting framework by 2026.
On 13 December 2024, Hong Kong authorities made this announcement at the Organization for Economic Co-operation and Development (OECD) Global Forum on Transparency and Effective Exchange of Information in Tax Matters.
Importantly, the country is taking the proactive measures regarding crypto regulation to counter cross-border tax evasion.
Commenting on the development, the Secretary for Financial Services and the Treasury, Hui Ching-yu said, “The Reporting Framework is the latest global standard for tax transparency.”
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Proposed Framework Will Require Residents To Report Crypto Transactions
Hong Kong Pledges Crypto Asset Reporting Framework by 2026 to Combat Tax Evasion pic.twitter.com/4hPXGj3D85
— Crypto Era (@_cryptoera_) December 17, 2024
The proposed crypto asset reporting framework will require tax-paying residents in the country to annually report their crypto accounts and transactions.
This builds upon the region’s existing Automatic Exchange of Financial Account Information in Tax Matters. This has been operational since 2018. Under this system, Hong Kong has been sharing financial account data with partner jurisdictions to facilitate tax assessments and detect evasion.
The new framework will extend these efforts to include cryptocurrency transactions.
Once implemented, the collected data will be shared with tax authorities globally to ensure fair and effective enforcement of tax laws.
Previously, the OECD announced a reporting framework in June 2023. This was also to ensure that global tax transparency is maintained.
Hong Kong Considers Global Standard For Tax Transparency
“Implementing the Reporting Framework is vital to maintaining Hong Kong’s reputation as an international financial and business center and reflects Hong Kong’s reputation as a responsible tax jurisdiction. Hong Kong has been committed to promoting international tax cooperation efforts, ” Ching-yu said.
According to the government press release, “Hong Kong has always firmly supported international efforts to improve tax transparency and combat tax evasion”
Since 2018, the country has automatically exchanged financial account information with partner tax jurisdictions every year. The relevant tax authorities may use the information for tax assessments and to detect and combat tax evasion.
Ching-yu said, “The government will listen to the views of relevant stakeholders and the public when preparing the necessary legislative amendments.”
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