April 16, 2014
Tax Catches Up to Americans in China
As part of the United States’ operation to fight U.S. tax evasion, Hong Kong came to an arrangement with the U.S. to cooperatively exchange information on all Americans who live, work, or have assets in the Chinese city.
The terms are fairly simple in the fact that exchanging of information will only be from the Chinese to the Americans. China does not collect taxes from its citizens who live in a different country. Furthermore, this arrangement might expedite the execution of the U.S. Foreign Account Tax Compliance Act (FATCA), which requires financial entities in a certain countries to fully divulge information about American bank accounts to the U.S. government.
What the Chinese decide to do on whether or not to implement FATCA in Hong Kong will set a precedent not only for China but also for the rest of the world.
Charles Kinsley, tax partner at KPMG in Hong Kong, claimed, “The general expectation is that China will sign…many mainland financial institutions in China are already working on FATCA projects…for Hong Kong’s financial institutions, this is a good thing.”
Source: Chow, Jason, “For Americans in China, the Taxman Cometh,” The Wall Street Journal, March 26, 2014