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Resource: [OECD library - the global knowledge base]

Question 1: if a Hong Kong company's shareholder and director all be Mainland PRC resident, will this Hong Kong company's financial information automatically transfer to Mainland PRC's authority?

Answer 1: may not. As long as the Hong Kong company's main business is Hong Kong local business and the business nature isn't investment holding etc., CRS will not penetrate the company and submit financial information to Mainland PRC's authority.

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4 Answers

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Question 2: any Rules regarding the definition of tax residence under OECD, i.e., under CRS?

Answer: Yes, 

1st refer place: please refer to following link:

http://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-residency/

We extract the portion for HK company:

Jurisdiction’s name: Hong Kong, China

Section II – Criteria for Entities to be considered a tax resident

An entity is regarded as a tax resident of Hong Kong, China if – 

  • (a) (where the entity is a company) the company is incorporated in Hong Kong, China; or if the company is incorporated outside Hong Kong, China, being normally managed or controlled in Hong Kong, China; or 
  • (b) (where the entity is not a company) the entity is constituted under the laws of Hong Kong, China; or if the entity is constituted outside Hong Kong, China, being normally managed or controlled in Hong Kong, China. 

The legal concept “normally managed or controlled” does not require that both management and control be exercised in Hong Kong, China. “Management” refers to the management of daily business operations, or implementation of the decisions made by top management, etc. “Control” refers to the control of the whole business at the top level, including formulating the central policy of the business, making strategic policies of the entity, choosing business financing, evaluating business performance, etc.

2nd refer place: please refer to following link:

https://www.ird.gov.hk/eng/tax/dta_aeoi.htm

definition provided here is: “Tax residents of reportable jurisdictions” refer to those who are liable to tax by reason of residence in the jurisdictions.

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Question 3: What's my Hong Kong tax TIN (Tax Identification Number)?

Answer 3: Please see the picture from: https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-identification-numbers/Hong-Kong-TIN.pdf

At following you can also find a tax PIN on your tax documents, but we think it should be treated as for e-tax login purpose:

https://www.ird.gov.hk/eng/pdf/ind_ctre_demo.pdf

https://www.ird.gov.hk/eng/pdf/irc6401e.pdf

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Question 4: Automatic Exchange of Financial Account Information in Tax Matters to come into force

Answer: reference: INLAND REVENUE DEPARTMENT

What's New
 
Refinements to Legislative Framework of Automatic Exchange of Financial Account Information in Tax Matters to come into force (Press Release - March 1, 2019)  
 https://www.ird.gov.hk/eng/ppr/archives/19030101.htm 
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Question 5: substantial activities requirement

Answer 5: 

  1. [BDO Newsletter: Updates on Economics Substance Requirements in BVI]
  2. Extra from HKICPA's notice email: The Organization for Economic Cooperation and Development (OECD) issued the Resumption of Application of Substantial Activities Factor to No or only Nominal Tax Jurisdiction (the OECD document) in November 2018. The OECD document imposes a global standard that requires "no or nominal tax jurisdictions" to introduce "substantial activities requirement" in order for their tax regimes not to be considered as harmful tax practices. The objective of introducing such substance requirement is to level the playing field and prevent shifting of profits derived from certain mobile business activities to tax-neutral jurisdictions. In view of the above, a number of tax-neutral jurisdictions such as Bermuda, the British Virgin Islands and the Cayman Islands have enacted domestic economic substance legislation effective from 1 January 2019. Sanctions for non-compliance include monetary penalties, entity strike-off and spontaneous exchange of information with other tax authorities.
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