On July, 10th 2013, the Legislative Council of Hong Kong enacted the Inland Revenue (Amendment) Bill 2013 which allows Hong Kong to enter into standalone tax information agreements (TIEA) with other jurisdictions in order to promote tax transparency.
Good or bad news? Definitely good. This will maintain the reputation of Hong Kong as an international business and financial center and enhance its relations with certain key jurisdictions to sign a Comprehensive Avoidance of Double Taxation Agreement (CDTA). In any case, the Government of Hong Kong has committed itself to safeguard the privacy and confidentiality of information of taxpayers in the same way as under a CDTA.
In this sense, on March 25th 2014, Hong Kong signed its first TIEA with the United States of America. Pursuant to this the two territories should collaborate on Exchange of Information. This shall constitute a first step towards and Intergovernmental Agreement (IGA) under the FACTA (US Foreign Account Tax Compliance Act).
FACTA requires US persons, either living in the USA or overseas, to declare their financial accounts held in other jurisdictions to US tax authorities and foreign financial institutions to report the financial information of their clients to the Internal Revenue Service (IRS).