Agreement on Automatic Exchange of Financial Account Information between Hong Kong and Korea

The Ministry Of Strategy and Finance (“MOSF”) announced that Korea and Hong Kong signed a bilateral agreement on the automatic exchange of financial account information in Hong Kong on January 23, 2017. The agreement will come into force when it is ratified by the National Assembly.

Based on the agreement, the tax authorities of both countries will collect the information on financial accounts in the contracting state held by residents of the other contracting state and will annually exchange the collected information from 2019.

The type of information to be exchanged will include:

• Personal identification information (e.g. name, address, tax identification number);
• Financial account information (e.g. account number, name of financial institution where the account is set up); and
• Other financial information (e.g. outstanding balance at financial accounts and amount and type of income such as interest and dividends).

The agreement on automatic exchange secured the measure to exchange financial information on a regular basis and enhance the level of information to be exchanged for the purpose of preventing offshore tax avoidance.

Korea executed with US the agreement on automatic exchange of financial account information in 2015 and has exchanged the information from 2016. Korea also plans to exchange the information from 2018 with Singapore based on the agreement executed in 2016. While making efforts to obtain financial information through the Multilateral Competent Authority Agreement (“MCAA”) on Automatic Exchange of Financial Account Information signed in October 2014, Korea will continuously make efforts to execute bilateral exchange agreements with 45 countries in 2017 including the Netherlands, Belgium and Ireland, and will seek to extend these efforts to 31 additional countries from 2018 and onward, according to the MOSF.