Hong Kong has commenced a public consultation regarding the implementation of the Crypto-Asset Reporting Framework (CARF) and amendments to the Common Reporting Standard (CRS).
The review, initiated by the government, details the city's strategy to begin automatically exchanging tax data on crypto-asset transactions with partner jurisdictions starting in 2028, and to implement the updated CRS from 2029.
Government Plans Legislative Amendments and New Reporting Obligations
The Financial Services and the Treasury Bureau has confirmed that amendments to the Inland Revenue Ordinance will be finalized within the upcoming year to support CARF and the revised CRS.
According to Secretary for Financial Services and the Treasury Christopher Hui, these changes are designed to align Hong Kong with international tax-cooperation standards. This alignment will enable the automatic exchange of information related to crypto-asset transactions on a reciprocal basis with suitable partner jurisdictions.
In 2023, the OECD published CARF, which introduces the annual automatic reporting of transactions in crypto-assets and incorporates new due diligence practices. This framework broadens the scope of financial information exchanged between tax authorities and includes additional digital financial products within the new CRS.
The government's consultation document outlines the specific procedures that reporting entities will be required to follow under the new framework. These include adherence to revised record-keeping, verification procedures, data handling, and submission formats upon its implementation.
In addition to implementing CARF, the government intends to introduce mandatory registration for financial institutions involved in reporting under the CRS. This proposal takes into account the ongoing peer review initiated by the OECD, which is in its second round in 2024, aimed at assessing the effectiveness of Hong Kong's administrative system.
The government is also enhancing penalties and their enforcement to maintain the city's standing in OECD surveys and ensure its compliance status.
Timeline Set for Automatic Exchange Starting in 2028
The automatic transfer of crypto-asset tax information is scheduled to begin in 2028, following the enactment of the necessary domestic legislation. The amended CRS will subsequently come into effect in 2029. Officials have stated that only partner jurisdictions adhering to confidentiality and data security standards will participate in Hong Kong's exchange mechanism.
Since 2018, Hong Kong has been participating in the automatic exchange of financial account information using the existing CRS with its current partner jurisdictions. This process allows tax authorities in partner jurisdictions to utilize shared information for assessing and investigating potential cross-border tax evasion.
The current consultation builds upon previous statements, emphasizing that these initiatives will integrate digital-asset reporting into the same international exchange mechanisms currently used for traditional financial accounts.
As prior data indicates, CARF is developed to address the challenges associated with reporting digital assets. Its purpose is to ensure that transactions involving crypto-related assets are included within the existing information-sharing mechanisms that tax administrations are expected to employ.
The consultation paper, available on the Financial Services and the Treasury Bureau website, details the proposals, reporting requirements, and enforcement measures. The deadline for submitting feedback is February 6, 2026, with submissions accepted via post or email.
The government has indicated that public input will be instrumental in guiding the implementation of CARF and the revised CRS as Hong Kong prepares to launch its crypto-asset tax information exchange with partner jurisdictions in 2028.