Hong Kong’s Legislative Council passed the Inland Revenue (Amendment) (Crypto-Asset Reporting Framework and Amended Common Reporting Standard) Bill 2026, with the first requirements due to take effect in 2027. The legislation implements OECD standards intended to strengthen tax transparency and combat cross-border tax evasion.

The amendments to the Inland Revenue Ordinance provide for the implementation of the Crypto-Asset Reporting Framework, or CARF, and the updated Common Reporting Standard, or CRS.

Crypto transaction reporting to begin in 2027

The OECD published CARF in 2023 in response to the rapid development of the digital asset market. The framework sets rules for the automatic exchange of tax information on cryptoasset transactions between participating jurisdictions.

CARF will take effect in Hong Kong in 2027. Relevant cryptoasset service providers will be required to collect specified transaction information so that the Inland Revenue Department can transmit it to other jurisdictions. Automatic exchanges of the data will begin in 2028.

The updated CRS expands reporting and customer due diligence requirements to cover digital financial products. It will take effect in 2028, with automatic exchanges of financial account information under the revised rules beginning in 2029.

Hong Kong will exchange the information with relevant jurisdictions on a reciprocal basis, subject to confidentiality and information-security requirements.

Authorities cite tax transparency and market confidence

Secretary for Financial Services and the Treasury Christopher Hui said implementing the standards was important to preserving Hong Kong’s status as an international financial and commercial hub.

“Hong Kong has been supporting international efforts in enhancing tax transparency and combatting cross-border tax evasion. Implementing the latest international standards for automatic exchange of information in tax matters is crucial to maintaining Hong Kong’s reputation as an international financial and commercial centre,” Hui said.

According to Hui, aligning Hong Kong’s legislation with international requirements should also strengthen confidence among crypto-asset service providers, financial institutions and digital asset users operating in the city or planning long-term investments there.

The Inland Revenue Department will prepare guidance to help businesses adapt to the requirements. It has also established a technical support team to respond to inquiries from market participants.

Hong Kong has conducted automatic exchanges of financial account information with partner jurisdictions under the CRS since 2018.

The legislation adds to Hong Kong’s regulation of digital assets. Authorities previously prepared consultations on licensing regimes for virtual asset trading service providers, custodians, advisers and asset managers. They also began discussions on tax oversight of cryptoassets.

Source: Incrypted