Hong Kong Targets Crypto Tax Evasion with 2028 Data Sharing Plan

Core Viewpoint - Hong Kong is initiating a public consultation to implement the OECD's Crypto-Asset Reporting Framework (CARF) and amend the Common Reporting Standard (CRS), aiming for automatic exchange of crypto tax information by 2028 [1]. Group 1: Legislative and Regulatory Framework - The government plans to amend the Inland Revenue Ordinance to implement CARF and the amended CRS, demonstrating a commitment to combat cross-border tax evasion [2]. - The automatic exchange of information will be reciprocal with partner jurisdictions that meet confidentiality and security standards, with the amended CRS set for implementation in 2029 [2]. - The CARF was published by the OECD in 2023 in response to the rapid growth of the digital asset market, providing a framework for automatic exchange of crypto transaction tax information [3]. Group 2: Enhancements and Compliance Measures - The new framework includes digital financial products and enhanced reporting requirements, addressing gaps in traditional financial account information exchange [4]. - The CARF builds on the existing CRS infrastructure, applying similar transparency standards to crypto assets that process billions in trading volume across licensed exchanges in Hong Kong [5]. - The government proposes mandatory registration for financial institutions to improve identification, alongside increased penalties and enhanced enforcement mechanisms [5]. Group 3: Strategic Context - The consultation occurs as Hong Kong balances the need for digital asset innovation with compliance to international regulatory standards [7]. - The city is pursuing aggressive fintech expansion through the "Fintech 2030" strategy, focusing on data, artificial intelligence, resilience, and tokenization under the DART framework [7].