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The Inland Revenue (Amendment) (No.2) Ordinance 2019 (Amendment Ordinance) was gazetted on 1 March 2019, under which the amendment of the taxation arrangement for the Automatic Exchange of Financial Account Information in Tax Matters (AEOI)¹ relating to MPF schemes and ORSO registered schemes will take effect on 1 January 2020. The objective of implementing AEOI is to comply with the Organisation for Economic Co-operation and Development (OECD)’s Common Reporting Standard (CRS) in fulfilling Hong Kong’s obligations and responsibilities as an international financial centre.

Following banks, insurance companies, securities firms and investment funds, MPF schemes and ORSO registered schemes will become reporting financial institutions (Reporting FIs) once the Amendment Ordinance comes into effect. Under the Amendment Ordinance, MPF schemes and ORSO registered schemes are required to comply with the due diligence and reporting obligations relating to the AEOI by collecting the tax residence information of scheme members and reporting to the Inland Revenue Department (IRD) the account information of those members who are tax residents outside Hong Kong. The IRD will transmit the information to the relevant tax authorities in AEOI partner jurisdictions. Hence, self-certification² will be required from account holders for all new MPF and ORSO accounts opened on or after 1 January 2020 for submitting to MPF trustees or ORSO employers/administrators to verify scheme members’ tax residency. Otherwise, the account opening process will be adversely affected and could not be completed.

According to the Mandatory Provident Fund Schemes Ordinance, employers are required by law to enrol newly joined employees in an MPF scheme within the permitted period and make timely MPF contributions. With the soon-to-be-launched Amendment Ordinance, the MPFA reminds employers to take all practicable steps to ensure that their employees become members of an MPF scheme. They should remind their employees to complete the enrolment form (including to complete the newly added tax residence self-certification) on time, and provide employees with all possible assistance in doing so.

On the other hand, newly joined employees should read the instructions carefully, complete the enrolment form which includes the self-certification and return it to their employers/MPF trustees/ORSO administrators as soon as possible to avoid delay in contributions caused by failure in account opening.

The MPFA calls on employers and employees to pay attention to the new arrangement. For details, please visit the IRD website: www.ird.gov.hk/eng/tax/dta_aeoi.htm or contact the relevant MPF trustee or ORSO administrator for enquiries.

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26 September 2019

1. AEOI is a global standard that involves the transmission of financial account information from Hong Kong to an overseas tax jurisdiction with which Hong Kong has entered into an AEOI agreement (known as an “AEOI partner”). The information relates only to the tax residents of the jurisdiction of the AEOI partner.
2. Self-certification is a formal declaration that account holders make in connection with their tax residence under the AEOI regime.