On 9 May 2014, the Hong Kong government announced it had substantially concluded discussions with the United States on a Model 2 Inter-Governmental Agreement (IGA) on the US Foreign Account Tax Compliance Act (FATCA).
Under the IGA, financial institutions in Hong Kong will be required to register and conclude individual agreements with the US Inland Revenue Service (IRS). Under these agreements, institutions will need to appoint an individual as a responsible officer and seek consent of their account holders who are US taxpayers to report their account information to the US IRS annually.
Certain exemptions are available. Whilst the text of the Hong Kong IGA is not yet public, a template Model 2 IGA is on the US Treasury’s website, together with Annex I covering due diligence obligations on identifying and reporting on US accounts and Annex II covering exemptions. FAQs published by Hong Kong’s Financial Services and the Treasury Bureau confirm that all Mandatory Provident Fund schemes are exempt.
Hong Kong regulators have been issuing circulars urging compliance with FATCA obligations, highlighting the 1 July 2014 deadline to register with the IRS.