Hong Kong ORS and CRS (Common Reporting Standard)

The Hong Kong ORS is not exempt from CRS/FATCA reporting; which means the ORS is not recognized internationally for deferral of income. ORS402(b) is an exempt from CRS and FATCA reporting exempt beneficiary financial account.

WE provide the whitepapers to explain the difference between a Hong Kong ORS and our private label ORS402(b).

Overseas Financial Planners Beware:

[box]Common Reporting Standard (CRS) disclosure facility to close in on Hong Kong ORS.[/box]

• OECD: Common Reporting Standard (CRS) disclosure facility to close in on retirement schemes in Hong Kong allegedly set up to circumvent CRS reporting.

[box type=”info”]The OECD in May 2017 launched an online disclosure facility for information on schemes designed to or suspected to circumvent the application of the CRS and thus avoid reporting.[/box]

Several ‎submissions to the disclosure facility highlighted the use of “Occupational Retirement Schemes” (ORSO) in Hong Kong allegedly intended to avoid reporting under the CRS. Certain registered ORSO schemes, unlike ORSO schemes exempted from registration, would qualify as non-reporting Financial Institutions for CRS reporting purposes under Part 2 of Schedule 17C to the Inland Revenue Ordinance (IRO).

[box type=”note”]The OECD reported that Hong Kong revenue authorities (IRD) took action and issued relevant guidance to clarify that only certain registered ORSO schemes are “out of scope” of CRS reporting, and were assessing whether further action was needed.[/box]

The IRD further underlined that anti-abuse provisions under section 61C in the IRO can be applied to counteract arrangement whose main purpose, or one of the main purposes is to avoid due diligence and reporting obligations under Part 8A of the IRO incorporating CRS reporting obligations.

[box type=”tick” size=”large” style=”rounded” border=”full”]The only way to process cash flows gross rather than suffering a current tax is to have the funds internationally recognized as an excluded from reporting financial account and an exempt beneficiary that is not subject to reporting to tax authorities because it is deferred compensation.[/box]

Photo credit: jordandemuth via Visual Hunt