Considering the various steps being taken for enhancing transparency across various jurisdictions the Financial Services and the Treasury Bureau (FSTB), of the Hong Kong Government has also started preparing itself and committed to support the implementation of automatic exchange of financial account information to deal with terrorist financing and money laundering. The country’s Inland Revenue Department has issued ordinance to the financial intuitions instructing to collect the information from the Account holders and thereafter exchange of will start by 2018.
Soon, after the legislative amendment by the Authority in Hong Kong the Multinational enterprises having business in the country would be required to file country by country reports for the accounting periods commencing on or after 1 January 2018. The Authority is in phase of setting out procedures for the same.
With regards to the disclosure and the transparency measures being taken by the Government it is important to take note of the conclusion of the public consultation on corporate beneficial ownership released on 13 April 2017 by the FSTB. Following are the measure being adopted for base erosion and profit shifting (BEPS) and know the details of the Beneficial Ownership Registers:
In Hong Kong, on or after 1 January 2018 all the multinational enterprise group will be required to submit a country by country reports (Cbc) for the accounting period with the Authority.
The time line to file the Cbc for Hong Kong resident ultimate parent company would be within 12 months after the end of the relevant accounting period. However, if the ultimate parent company is having resident in another jurisdiction – it will not require the filing of CbC report.
The Cbc Report will require disclosure of details in relation to the global allocation of the income, tax payment and location of economic activity in the jurisdictions of operation
It would be required to be filed, if the following conditions are met:
- If the preceding accounting period consolidated group revenue is EUR750 million or more.
- Having entities or operations in two or more jurisdictions
As currently the existing laws of the Hong Kong does not require the companies to maintain and disclose information in relation to the ultimate beneficial ownership. However, the listed companies are required to maintain and disclose the same. After the public consultation on the subject in March 2017 it is proposed to maintain a register of individuals with significant controls (PSC register) by all the companies. The register must contain the following details:
- Name of the registrable individual or entity
- Date when the individual or the entity became registrable
- Nature of the control of the individual or the entity.
- Details of Identity card, passport number and issuing country of the individual
- Legal form and company registration number of the entities
- Correspondence details of the individual and entity
Thus, implementation of the above-mentioned transparency and disclosure norms by the Hong Kong Government would be a good step to deal with terrorist financing and money laundering in line with the steps being taken across the world in other jurisdictions.
