HK Removed From EU Tax Watchlist

The Hong Kong Special Administrative Region Government today welcomed the European Union’s decision to remove Hong Kong from its watchlist on tax co-operation.

In 2017 and 2018, the EU had put 68 tax jurisdictions including Hong Kong on the watchlist, and monitored the progress of these jurisdictions in implementing the requirements of international tax co-operation.

Secretary for Financial Services & the Treasury James Lau said Hong Kong has all along supported and facilitated the efforts of the international community in enhancing tax transparency and combating cross-border tax evasion.

"Since 2018, Hong Kong has implemented various initiatives relating to international tax co-operation and fulfilled the commitments made to the EU.

“The latest decision of the EU shows that Hong Kong's compliance with the standards of international tax co-operation is recognised by the international community."

The initiatives implemented by Hong Kong include the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which came into force on September 1, 2018.

It allows Hong Kong to effectively implement the automatic exchange of financial account information in tax matters (AEOI) and the Base Erosion & Profit Shifting Package promulgated by the Organisation for Economic Co-operation & Development.

The first exchanges under the AEOI with the relevant jurisdictions were smoothly conducted in September and October 2018.

The Inland Revenue (Amendment) (No. 6) Bill 2017 and the Inland Revenue (Profits Tax Exemption for Funds) (Amendment) Bill 2018 alter the tax regimes in respect of corporate treasury centres, professional reinsurance, captive insurance, offshore funds and offshore private equity funds by extending the coverage of the relevant tax concessions from non-domestic transactions to domestic transactions in order to comply with international requirements.