Are you planning to enter the financial services niche in Hong Kong? Hong Kong is a renowned financial hub with every bank ensuring it has a branch or headquarters there. But the financial services sector has changed so much.
After Hong Kong passed the framework for Automatic Exchange of Financial Information (AEOI), new investors have more requirements compared to several years back. Here are some great tips to help you comply with CRS framework when investing in the financial services.
Determine whether you are a reporting entity
The Hong Kong framework for Automatic Exchange of Financial Information (AEOI) can help you to know whether you are a reporting entity or not. Reporting entities are institutions that handle information and assets such as cash for foreign and local clients.
They include organizations such as banks and insurance companies among others. You need to look at the Hong Kong AEOI framework carefully and even seek assistance before rolling out the business. For example, a new investor with a mobile payment platform qualifies as a reporting institution.
Create a framework for extra scrutiny of clients’ information
If you are classified as a reporting entity, as mentioned here, it is important to set out a clear guideline for gathering the information that IRD requires. This is very important because you will be able to scrutinize applications as they come as opposed to piling them in the system.
Note that Hong Kong framework for Automatic Exchange of Financial Information (AEOI) appreciates the complexity that comes with collecting financial information. Therefore, what you need is a system that works and not necessarily a perfect one.
Understand the timelines for tax information submission
When a law is set in place, every enterprise and entity must strictly follow it. This is the case when it comes to deadlines set in law. The first phase of information gathering from reportable accounts in Hong Kong ended on December 31st of 2017. This means that new enterprises classified as reportable entities have to continue gathering information and prepare to hand reports by close of the current financial year.
While the CRS (Common Reporting Standards) has introduced new ways of doing things, you do not have to shy away from the financial niche.
You only need to install a system for additional screening to identify reportable accounts and capture all the details. Besides, you should also be on the lookout because the status of some countries with no CTDA (comprehensive avoidance of double tax agreement) with Hong Kong might change in future.