background image
13.1. GAAR and General Anti-Avoidance Measures

Hong Kong's Inland Revenue Ordinance (IRO) contains Hong Kong's general anti-avoidance rules. Under the rules, Hong Kong tax authorities can disregard or counteract the tax benefits of a transaction deemed to be tax avoidance in nature. Such transactions include the use of artificial and fictitious transactions, structuring of transactions for the sole purpose of producing a tax benefit, or the use of tax loss companies.

Automatic Exchange of Financial Account Information (AEOI)

Hong Kong has put in place a legislative framework for support the implementation of automatic exchange of financial account information. It conducts AEOI on a reciprocal basis with partners with which Hong Kong has signed a comprehensive avoidance of double taxation agreement or tax information exchange agreement.

Under the AEOI standard, financial institutions are required to identify financial accounts held by tax residents of reportable jurisdictions in accordance with due diligence procedures. Required information of these accounts is collected and furnished to the Inland Revenue Department. Such information will be exchanged on an annual basis.

As of March 2017, Hong Kong has signed agreements with 9 jurisdictions (i.e. Japan, Korea, United Kingdom, Belgium, Canada, Guernsey, Italy, Mexico and the Netherlands), for AEOI in tax matters.