On 25 January 2017, the Hong Kong government announced that Hong Kong and Korea have signed an agreement for the automatic exchange of financial account information in tax matters. Such exchanges will commence in 2019.
The Automatic Exchange of Information (“AEOI”) requires financial institutions to identify financial accounts held by tax residents in reportable jurisdictions, and such information will be exchanged on an annual basis. This exchange enables the discovery of formerly undetected tax evasion activities.
Korea is the third country to sign such an agreement with Hong Kong. A Hong Kong spokesman has said, “Since the signing of the first two agreements for AEOI with Japan and the United Kingdom in late 2016, we have been seeking to expand Hong Kong’s AEOI network with other tax treaty partners. The signing of the agreement with Korea signifies the government’s efforts in this respect.” The Hong Kong government will include Korea in the list of “reportable jurisdictions” under the Inland Revenue Ordinance.