Hong Kong's Legislative Council passed a bill on November 4 to bring crypto-asset transactions into an international tax-information reporting system. The government says covered service providers will begin collecting information in 2027, with the first exchanges between Hong Kong and partner tax authorities scheduled for 2028.

The government's announcement confirms passage of the Inland Revenue amendment bill covering the Crypto-Asset Reporting Framework, known as CARF, and changes to the Common Reporting Standard. The decision concerns tax transparency and information exchange. It does not announce a new percentage tax on crypto holdings or transactions.

The two systems have different starting dates. The amended Common Reporting Standard takes effect in 2028, with exchanges under that updated standard beginning in 2029. The government says exchanges will be reciprocal and subject to confidentiality and security safeguards. The Inland Revenue Department will issue guidance and has established a team to support the industry. Hong Kong has already exchanged financial-account information annually under the existing standard since 2018; the new legislation extends that transparency work to crypto transactions.

What providers would have to report

The department's CARF overview describes reporting businesses as those that carry out exchanges for customers, including intermediaries and trading-platform operators. The framework also covers businesses acting as the counterparty to customers' exchange transactions. Whether a provider falls within Hong Kong's rules depends on its connection to the jurisdiction, not simply where a customer opens a website.

Those connections include tax residence, incorporation or organisation, management and a regular place of business. Branch activity can also create reporting obligations. The overview explains that a hierarchy of these connections is intended to prevent the same provider from facing duplicate obligations in several jurisdictions. The page still contains pre-passage wording, so its detailed implementation descriptions should be read alongside the November 4 announcement.

The information described includes provider and reportable-user identification, tax residence and tax identification numbers, together with aggregated transaction data for each relevant crypto-asset. The department also describes customer self-certification procedures used to establish tax residence. This is a reporting framework for covered providers and users, rather than a requirement that every person submit the same form solely because they own a token.

Why crypto records need a separate framework

The OECD's explanation of CARF identifies a gap in earlier cross-border reporting. Crypto-assets can be held and moved without the banks and other financial institutions that traditionally supply tax authorities with account information. Exchanges and wallet services can therefore sit outside parts of the older reporting system, reducing authorities' visibility of taxable activity.

CARF addresses that gap through domestic reporting rules, international arrangements for exchanging the resulting information, and a common electronic format. These are separate parts of the process. Passing domestic legislation does not mean every possible overseas exchange relationship begins immediately. Hong Kong's announcement specifies a later start for international exchanges and refers to partner jurisdictions.

The OECD framework covers exchanges between crypto-assets and conventional currencies, exchanges between different crypto-assets, and transfers. It distinguishes transaction categories and uses aggregated reporting by asset type. Its purpose is to give authorities information for checking tax compliance, rather than to prescribe a single worldwide tax rate or determine the tax outcome of every transaction.

Financial-account reporting changes alongside CARF

The department's explanation of the amended Common Reporting Standard describes expanded coverage for digital money products and certain crypto-related financial products. It also sets out additional account information, including whether an account is jointly held, the number of joint holders and whether valid tax-residence self-certification has been obtained.

That explanation describes measures to avoid reporting the same gross proceeds twice under both systems. Where a financial institution is also a reporting crypto-asset provider, relevant proceeds reported under CARF need not also be reported under the amended standard. The department cautions that this explanatory page was prepared from the bill and readers should follow subsequent legislative developments.

Dalimss News has separately covered France's crypto tax-information bill and the UK's proposed stablecoin withholding treatment. Those are different measures. For Hong Kong, the immediate development is legislative passage, followed by provider preparation and further implementation guidance before information exchanges begin.