LegCo Passes TIEA framework bill

Inland Revenue (Amendment) Bill 2013 is now law.

The Legislative Council on July 10 enacted this bill that enables the government to enter into stand-alone Tax Information Exchange Agreements (TIEAs) with other jurisdictions where necessary.

The bill enhances the existing Exchange of Information or EoI arrangements under Comprehensive Avoidance of Double Taxation Agreements or CDTAs.

Under the Inland Revenue Ordinance, Hong Kong previously could only exchange tax information with another jurisdiction under the framework of a CDTA that Hong Kong had entered into with that other jurisdiction.

The latest international EoI standard is that a jurisdiction should make available both CDTAs and TIEAs as instruments for EoI. The Global Forum on Transparency and Exchange of Information for Tax Purposes has recommended that Hong Kong should put in place a legal framework for entering into TIEAs.

This is crucial for Hong Kong to prepare for the Phase 2 peer review of the Global Forum on jurisdictions' compliance with the international EoI standard in September 2013.

Secretary for Financial Services and the Treasury Prof K C Chan said the bill’s passage signifies a major step forward to enhance tax information exchange and to bring Hong Kong on par with the international standard on tax transparency and cooperation.