Amid the global trend towards greater transparency in tax administration and closer cooperation between tax authorities, Hong Kong has so far lagged behind other developed economies in failing to incorporate in its double taxation agreements the latest Organisation for Economic Co-operation and Development cross-border tax information exchange standard. Following several consultations on liberalising Hong Kong’s tax information exchange regime, the Inland Revenue (Amendment) Ordinance was enacted on 15 January 2010, which would amend the Inland Revenue Ordinance and expand the powers of the Inland Revenue Department in collecting and disclosing information concerning foreign tax liabilities to Hong Kong’s double taxation treaty partners.

The legislative amendments however have attracted concerns from the business and professional sectors in Hong Kong, particularly in relation to the precise scope of information exchange, whether banking information can be passed on by the Inland Revenue Department to a foreign tax authority, any safeguards for protecting individual taxpayers’ right to privacy, and the apparent lack of channels for challenging an information disclosure on any basis other than factual inaccuracy.