What should you do?
Determining whether your organisation is a financial institution under these rules is the first and most crucial step.
Financial institutions must register with the tax authorities. For Hong Kong financial institutions this will be the Hong Kong Inland Revenue Department (IRD) and, in some cases, the US Internal Revenue Service (IRS).
Specific due diligence procedures are required of financial institutions to identify potentially reportable account holders or beneficial owners. These will be account holders or beneficial owners who are resident outside of Hong Kong in another jurisdiction or who (for FATCA purposes), are US persons. The prescribed procedures on how this must be done are very detailed and there is a penalty regime for Financial Institutions that fail to comply.
An annual CRS report must be filed with the IRD by Hong Kong financial institutions by 31 May following the calendar year in question. The report must include details of any reportable accounts or beneficial owners, including the value of the account or equity interest and where the account holder is `resident for tax purposes. This information is then exchanged by the IRD with the relevant jurisdictions. Separately, an annual FATCA report must be filed directly with the IRS to report US account holders. The due date for filing the report is 31 March following the calendar year being reported.
Financial institutions may be required to certify their status under these rules to other financial institutions by completing self-certification forms.