HONG KONG SAR, CHINA Trends and Developments Contributed by: Hui Wang and Hui Zheng, King & Wood
Greater procedural flexibility does not, however, reduce structural complexity. Families applying through a private company structure must satisfy both the New CIES investment requirements and the sub - stantive requirements of the family office tax conces - sion regime. Asset ownership and valuation, source of funds, continuing FIHV management and post- approval portfolio maintenance obligations all need to be addressed before the application is launched. The New CIES facilitates entry but does not replace proper structuring. CARF and the Amended CRS: Implementation in Hong Kong In 2023, the OECD introduced CARF and amend - ments to the CRS, establishing a two-track frame - work for the next generation of cross-border tax infor - mation transparency. CARF focuses on transaction flows in crypto-assets, covering exchanges between crypto-assets and fiat currency, exchanges between crypto-assets, and cross-border transfers. It requires reporting crypto-asset service providers (RCASPs) to report client identity and transaction information for the purposes of automatic exchange between tax jurisdictions. The amended CRS extends reporting obligations beyond traditional financial accounts to digital financial products, including central bank digital currencies (CBDCs), tokenised financial assets and electronic money products. This development is closely connected with Hong Kong’s construction of a virtual asset regulatory framework. Following the introduction of exchange licensing, stablecoin regulation and tokenised asset initiatives, supplementing tax reporting and cross- border data exchange mechanisms is a necessary further step for Hong Kong’s virtual asset market to be integrated into the trust architecture of the mature international financial system. Legislative progress and implementation timeline On 9 December 2025, the Financial Services and the Treasury Bureau launched a public consultation on the implementation of CARF and the amended CRS in Hong Kong, formally initiating the domestic legislative process. The Bureau emphasised that implementation of CARF is necessary not only for Hong Kong to fulfil its international obligations, but also for maintaining
its reputation as an international financial and com - mercial centre. On 20 May 2026, the Inland Revenue (Amendment) (Crypto-Asset Reporting Framework and Amended Common Reporting Standard) Bill 2026 (the “CARF Bill”) was announced for gazettal, with introduction to the Legislative Council for first reading scheduled for 3 June 2026. The Inland Revenue (Amendment) (Auto - matic Exchange of Information) Bill 2026 (the “CRS Amendment Bill”) was gazetted on 27 March 2026 and introduced to the Legislative Council for first reading on 1 April 2026; it is currently at second reading stage and is expected to come into force on 1 January 2027. In respect of CARF, subject to enactment of the CARF Bill within 2026, the Inland Revenue Department (IRD) has published the following key implementation mile - stones. • January 2027: RCASPs to commence due dili - gence procedures for new and pre-existing crypto- asset users to identify crypto-asset users that are reportable users and/or have controlling persons that are reportable persons, and keep relevant information and documentation. • September 2027 (registration should be completed by December 2027 or January 2028): RCASPs with reporting nexus to Hong Kong to commence registration with IRD, subject to the availability of the CARF Portal. • 2027 Q4: RCASPs to submit test data files of self- developed software to IRD for validation. • January 2028: IRD to issue CARF Returns to RCASPs. • June 2028: RCASPs to file CARF Returns to IRD. • September 2028: IRD to exchange information with CARF partners. Scope of coverage: CARF and the amended CRS - complementary, not overlapping CARF and the amended CRS are complementary in design, together filling the coverage gaps in the existing information exchange framework for digital assets. However, they differ in the asset classes cov - ered, the reporting entities involved and the granularity of reporting.
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