Key Highlights
- Hong Kong opens public consultation on CARF and revised CRS to cover crypto and digital financial products.
- Exchanges, brokers, and wallet providers must report user and transaction data to tax authorities annually.
- Automatic exchange with partner jurisdictions to start in 2028; updated CRS applies from 2029 on a reciprocal basis.
Hong Kong has started a public consultation on new tax-reporting rules, aiming to include crypto assets in the same international information-sharing system already used for traditional financial accounts.
The proposal centers on adopting the OECD’s Crypto-Asset Reporting Framework (CARF) and the updated Common Reporting Standard (CRS). Both are intended to stop individuals and companies from hiding income or assets across borders.
CARF makes sure that crypto transactions, which often happen outside regular banks, follow the same tax reporting rules as regular financial accounts. The updated CRS now also covers newer digital financial products, like certain digital money, crypto derivatives, and crypto-related investments. This shows that digital assets carry similar tax risks as traditional accounts.
How it will work
Hong Kong has been automatically exchanging financial account data with partner jurisdictions since 2018 under the CRS.
Under the new plan, crypto exchanges, brokers, custodians, wallet operators, and other intermediaries will need to collect and report user and transaction data to Hong Kong’s tax authorities, who will share that information annually with eligible foreign counterparts. Only jurisdictions meeting strong confidentiality and data-security standards will be included, and all exchanges will be reciprocal.
Secretary for Financial Services and the Treasury Christopher Hui said Hong Kong would update its tax laws “to demonstrate our commitment to promoting international tax co-operation and combating cross-border tax evasion, as well as to fulfil our international obligations.”
He added that the government aims to begin exchanging crypto-asset tax data from 2028 and implement the revised CRS from 2029 “with suitable partners, which are required to meet the standards relating to the protection of data confidentiality and security, on a reciprocal basis.”
The consultation also addresses recommendations from the OECD’s ongoing peer review of Hong Kong’s CRS framework.
The government proposes that financial institutions covered by the reporting regime be under mandatory registration, with increased penalties for non-compliance and enhanced enforcement mechanisms in order to better identify and meet international standards.
A detailed consultation paper explaining the proposed rules, including reporting procedures, record-keeping obligations, penalties, and enforcement, is available on the Financial Services and the Treasury Bureau website. Public submissions can be sent by post or email until February 6, 2026.
These rules are important for the crypto market and the financial system. They aim to increase transparency in crypto transactions, reduce the risk of tax evasion, and align Hong Kong’s reporting with international standards.
Also Read: HashKey Moves Ahead With $215M Hong Kong IPO Plan
