Hong Kong begins consultation on revised CARF and CRS rules to expand cross-border crypto tax reporting rules.
Hong Kong began a public consultation on updates to its crypto tax reporting rules. The proposal seeks to restructure compliance requirements and increase cross-border reporting obligations for digital asset activities. Moreover, the plan complements wider international efforts against tax evasion, as regulators are seeking consistent supervision of emerging financial technologies.
Hong Kong Targets Stronger Crypto Reporting Alignment
Hong Kong plans to align its tax structure with international ones that govern digital assets. The government plans automatic information exchange of tax-related information for crypto transactions with partner countries starting in 2028. Additionally, the system will be operated on a reciprocal basis and will apply increased verification rules, in accordance with growing international expectations for transparency.
Related Reading: UAE Joins Global Crypto Tax Reporting Agreement | Live Bitcoin News
Since 2018, financial account information has been exchanged between Hong Kong and foreign countries under the international standard – the OECD Common Reporting Standard. This process already supports annual information flows that help the authorities to detect irregularities and review compliance risks. Now, officials believe the expansion of these sorts of practices to crypto assets is necessary, given the size and speed of the sector.
The Australian and New Zealand arm of the Organisation for Economic Cooperation and Development (OEO) released the Crypto Asset Reporting Framework in 2023 to fill in the gaps in global oversight. CARF includes new digital financial products and establishes new and tighter reporting and due diligence requirements. Therefore, Hong Kong wants legislative amendments to be made in order to integrate these requirements into local law and to prepare the institutions for broader requirements.
The Secretary for Financial Services and the Treasury, Christopher Hui, stressed that Hong Kong is keen on international cooperation. He said CARF and updated CRS rules will assure the city’s financial reputation. Furthermore, he said that the amendments will shore up Hong Kong’s long-term position as a trusted regional and global financial hub.
Revised Standards Intend to Enhance Oversight and Enforcement
The government is hoping to finish legislative changes next year that will accommodate the expanded framework. As a result, automatic exchange of tax-related crypto information will start from 2028, and the updated CRS requirement will come into effect from 2029. Hong Kong will only cooperate with jurisdictions that have strict confidentiality and security standards.
The administration system of Hong Kong for CRS implementation is also under review of the OECD. This peer review focuses on enforcement strength, institutional preparedness, and data accuracy. Because of this process, Hong Kong has a financial institution mandatory registration to enhance the quality of identification and oversight.
The government also plans on increasing penalties for not complying with the law, as well as having more enforcement tools. These measures are taken to maintain Hong Kong’s positive assessment in the reviews of the Organisation for Economic Cooperation and Development (OECD) as well as international partners. Additionally, authorities believe increased consistency across institutions will minimise compliance gaps and contribute to clear reporting practices.
On the whole, Hong Kong’s consultation marks an intelligent move towards greater integration with worldwide systems of tax transparency. The updated frameworks can reshape cross-border reporting for digital assets. They may influence regional regulatory approaches and strengthen oversight. Consequently, Hong Kong builds better compliance, market trust, and financial stability.