- Under CARF, crypto-asset service providers must collect transaction information from 2027, with automatic exchanges beginning in 2028.
- Updated CRS rules take effect in 2028, expanding coverage to digital financial products, while information exchanges begin in 2029.
- Hong Kong’s Inland Revenue Department will issue guidance and provide technical support to help businesses meet the new reporting requirements.
Hong Kong’s Legislative Council passed a new crypto tax reporting law on November 4. The measure implements the OECD’s Crypto-Asset Reporting Framework and requires relevant service providers to collect transaction data from 2027. The city plans automatic exchanges of crypto tax information with partner jurisdictions from 2028 under the new framework.
Crypto Providers Face New Reporting Duties
The law implements two standards developed by the Organisation for Economic Co-operation and Development. One is the Crypto-Asset Reporting Framework, known as CARF.
Under CARF, service providers must collect information specified by the framework from 2027. The Inland Revenue Department will use that information for annual exchanges with partner jurisdictions starting in 2028.
The OECD published CARF in 2023 as digital asset markets expanded. The framework provides for automatic exchanges of tax information on crypto-asset transactions. Hong Kong will conduct exchanges reciprocally, subject to data confidentiality and security.
Updated CRS Rules Begin in 2028
The legislation also updates Hong Kong’s Common Reporting Standard, which governs annual exchanges of financial account information. The amended CRS will take effect in 2028. It extends coverage to digital financial products and strengthens reporting and due diligence requirements.
However, exchanges under the updated standard will begin in 2029. The Inland Revenue Department will automatically share financial account information with suitable partner jurisdictions under the revised rules.
Hong Kong has exchanged financial account information with partner jurisdictions annually since 2018 under the existing CRS. The government said the system helps tax authorities detect and combat tax evasion.
Christopher Hui Sets Out Implementation Support
Financial Services and the Treasury Secretary Christopher Hui said the law supports international tax transparency. He also cited efforts to combat cross-border tax evasion. Hui said alignment with international standards helps maintain Hong Kong’s standing as an international financial and commercial center.
He added that the changes would reinforce confidence among crypto-asset service providers and financial institutions. Digital asset users operating or investing in Hong Kong are also included.
To help businesses prepare, the Inland Revenue Department will issue guidance and has established a dedicated team. The team will provide technical support and respond to industry questions about the new requirements.
