The financial information of Americans working in Hong Kong will soon be available to the U.S. government as part of Washington’s plan to better regulate tax evasion.
The tax-information agreement, signed March 25, allows the U.S., “under specified conditions,” to file a request for financial information to the Inland Revenue Department, reports South China Morning Post. According to the Financial Services and Treasury Bureau, the agreement also sets the foundation for an additional agreement that would allow U.S. tax officials to request information straight from Hong Kong banks.
The agreement is described as a key piece of Washington’s anti-tax evasion law that will kick into effect this July. Under the Foreign Account Tax Compliance Act, foreign financial institution must be willing to provide to U.S. tax authorities information on the finances of any person under U.S. tax rules. The law was signed by President Barack Obama in 2010. But its activation has been postponed twice, once in January 2013 and again in January of this year. Institutions that do not complete the request for information as outlined in the law will have 30 percent of their U.S.-sourced income withheld by U.S. tax authorities.
After signing the first agreement with U.S. Consul General Clifford Hart, Secretary for Financial Services and the Treasury Professor Chan Ka-keung said Hong Kong’s acceptance of the agreement displayed its dedication to completing its international obligations. “The [agreement] with the U.S. has adopted highly prudent safeguard measures to protect taxpayers' privacy and the confidentiality of information exchanged,” he said.
To officially become law, an order under the Inland Revenue Ordinance will have to made by the Chief Executive in Council. If the Legislative Council doesn’t object to the order, it will then go into effect.