Corporate Bank Account in Hong Kong: What to Expect In Line With the New Hong Kong CRS Framework
In mid-2016, Hong Kong passed a law that provides the framework for Automatic Exchange of Financial Information (AEOI) framework. The framework asserts the Hong Kong’s commitment to walking with OECD members in addressing the mammoth problem of tax evasion. However, many people have been asking about the implication of the new framework to offshore investors.
The AEOI framework came about after it emerged that tax avoidance was a major component in accelerating economic recessions. When people avoid paying taxes, the smaller enterprises that are committed to meeting tax obligations get overburdened and finally bow out. If such cases happen on a large scale, the economy starts receding.
What to expect when opening a corporate bank account in line with Hong Kong CRS framework
The CRS framework passed in 2014 by OECD members and now adopted in law by Hong Kong targets facilitating the exchange of financial information for offshore account holders. If you are opening a corporate bank account and trying to get visa in Hong-Kong, here is what to anticipate.
- Extra scrutiny by the reporting institutions with the target of knowing you more
The reporting entities such as banks will want to know you more. They want to get closer and understand the nature of the business you do. Does the enterprise help you to hide from paying taxes back at home? Once the banks understand all the details, they will categorize you as a high risk or low-risk party. This is the information that the Hong Kong’s IRD will share with your home tax department.
- Demand for tax details from home country
In the past, many people moved to foreign jurisdictions with an intention of hiding their cash and avoiding paying taxes. Now, your bank in Hong Kong will want to know whether you are compliant or not. This means that your tax personal identifier codes might be required.
- Detailed explanation of the business clients’ details such as location and locations
The Hong Kong banks want to maintain good rapport with the administration. Therefore, they will dig deeper to try and understand the nature of the clients you will deal with. If you have been in operation for some time, the bank will take a closer look at the clients and where they come from.
The Hong Kong AEOI framework has changed the entire financial and banking landscape in Hong Kong. It is time to ensure you are compliant with all tax laws back at home and in Hong Kong. Make sure to follow the framework well to avoid getting your bank account application declined or terminated.