Hong Kong joined the CRS agreement in 2017, which is the abbreviation of the global tax "Common Reporting Standard", which mainly stipulates the exchange of tax information between the countries of the world. This article will help investors understand the information and knowledge required by investors and Hong Kong companies under the CRS agreement.
Learn more about Hong Kong company audits and tax returns.
1. People affected by the CRS protocol.
The CRS agreement only requires the people with overseas assets to exchange tax information and financial information, specifically, the following groups of people will be affected by the CRS agreement:
1.For non-Chinese residents whose financial assets are located in China, their financial account information in China will be exchanged with the tax authorities of the country where their residents are taxed.
2.For Chinese residents with financial accounts overseas, any financial assets outside of China, such as deposits, reliance, **, etc., are considered as non-resident financial accounts overseas, and must exchange information with the Chinese tax authorities.
If the above two groups of people deliberately misdeclare or conceal their tax residency status, they will be included in the money laundering list for investigation after being investigated, and the relevant persons will be severely punished.
2. Assets required to be declared by CRS.
CRS needs to exchange information on financial assets, so investors' non-financial assets such as cash, real estate, calligraphy and paintings, and jewelry do not need to be exchanged. The following types of financial information are exchanged:
1.All kinds of bank deposit accounts and escrow accounts.
2.Insurance contracts with cash value, investment insurance contracts.
3.Equity and debt interests in financial institutions.
4.Annuity contracts.
3. Which insurances need to be declared for CRS.
The CRS agreement stipulates that all insurance contracts with cash value need to be declared, and the following two points can help investors identify whether the policy has a specific cash value.
1.After the cancellation of the policy, if the corresponding funds can be retrieved (except for the death benefit), it is considered to have a cash value.
2.If the policy can be mortgaged, it is also considered to have a cash value. Basically, large insurance policies in Hong Kong have a cash value and need to be declared.
4. Determination of CRS declaration of enterprise operating income.
Whether an enterprise needs to declare its business income can be judged from the following two points:
1.See if there are financial assets in the income account. CRS requires the declaration of financial asset information. If it is a resident account, the income obtained through business activities is not included in the scope of the declaration.
2.Check whether the income account is a non-resident account, and if it is a non-residential account, see whether its territory is within the scope of the declaration.
With the increasingly strict financial supervision, if investors have financial accounts overseas, they must declare according to the regulations, otherwise they will be audited and judged to be a money laundering account, which will bring huge losses to overseas investment and their own property.