FATCA: Hong Kong and US sign IGA Model 2
On 13 November 2014, Hong Kong and the US signed a Model 2 inter-governmental agreement (IGA) to facilitate compliance with the US Foreign Account Tax Compliance Act (FATCA) by financial institutions (FIs) in Hong Kong.
Most notable under Model 2, reporting will be to the US Internal Revenue Service (IRS) rather than the Hong Kong Inland Revenue Department (IRD) – a marked difference from the Model 1 IGAs chosen by most countries. The first reports will be due by 31 March 2015 in respect of the year-end 2014.
Unless qualifying for exemption, a Hong Kong FI must register on the US IRS online portal, enter into a separate individual agreement with the IRS and obtain the Global Intermediary Identification Number (GIIN). Further, the FI will have annual obligations with respect to due diligence and subsequent reporting of any accounts held by US taxpayers.
Annex II of the Hong Kong-US IGA lists certain exemptions for entities, FIs and financial products which otherwise may fall within FATCA registration, reporting and/or withholding rules. Specifically for Hong Kong, the IGA classifies Mandatory Provident Fund (MPF) schemes and Occupational Retirement Schemes Ordinance (ORSO) schemes satisfying certain criteria as exempt from GIIN registration.
The IGA, original press release and FAQ from the Financial Services and the Treasury Bureau (FSTB) can be found by following the below links: