The Hong Kong Crypto Asset Declaration Bill has been passed; will the trading information of mainland residents be exchanged?

*Author: [ChandlerZ](https://a.foresightnews.pro/article/detail/101438), Foresight News*

In Hong Kong, trading Bitcoin, exchanging other tokens with USDT, or transferring crypto assets from exchanges to external wallets may become part of tax information reporting in the future.

On November 4, the Hong Kong Legislative Council passed the "2026 Taxation (Amendment) (Crypto Asset Reporting Framework and Revised Common Reporting Standard) Bill." According to the plan, the two sets of rules involved in the bill will be implemented in phases: the crypto asset reporting framework will take effect on January 1, 2027, with eligible service providers starting to collect information from 2027, and Hong Kong plans to exchange information with relevant tax jurisdictions starting in 2028; the revised common reporting standard will take effect on January 1, 2028, with Hong Kong planning to exchange financial account information according to the new standard starting in 2029.

This arrangement has attracted the attention of many cryptocurrency holders. **Who do you need to report to when using Hong Kong exchanges? Will the trading records of tax residents in mainland China be sent back to the mainland? If you hold Hong Kong identity, do you not need to worry about overseas tax issues?**

From the legislative text and the tax bureau's explanation, it is necessary to distinguish between three stages: the collection of information by trading platforms, reporting to the Hong Kong tax bureau, and the exchange of information between Hong Kong and other tax jurisdictions. The user's tax residency status, the operating entity of the exchange, the type of transactions, and the list of reporting requirements published by Hong Kong will all affect the final outcome.

### When will exchanges start collecting information?

This legislation involves two related but different international information exchange rules.

**The Common Reporting Standard, abbreviated as CRS, is an automatic exchange standard for financial account tax information established by the Organisation for Economic Co-operation and Development.** Hong Kong has long implemented CRS, where banks, some insurance institutions, and other financial institutions identify the tax residency status of their clients and report relevant account information to the Hong Kong tax bureau as required. This revision expands the scope of applicable digital financial products and increases due diligence and reporting requirements.

The CRS exchange information listed by the Hong Kong tax bureau includes account numbers, year-end balances or values, and, where applicable, the total amount of interest, dividends, and gains from the sale of financial assets. The information for crypto trading accounts needs to be assessed based on account types, service provider identities, and the applicability of CARF and the revised CRS.

**The Crypto Asset Reporting Framework, abbreviated as CARF, specifically deals with information on crypto asset transactions.** After meeting relevant conditions, crypto exchanges, brokers, and other service providers need to identify users, collect transaction information, and report to tax authorities as required. The tax authorities will then exchange information with relevant jurisdictions based on applicable arrangements.

The first data collection year for CARF is 2027, and existing accounts will also need to supplement information. According to the original draft, for users who established relationships on or before December 31, 2026, service providers must obtain self-certification by January 1, 2028.

Self-certification refers to users informing the platform of their tax residency status by providing information such as name, address, tax residency location, and tax identification number. When new users open accounts, service providers need to obtain and verify this certification; existing users may receive additional requests when the platform updates customer information.

The tax residency location is determined by the relevant local tax laws. Passports, identity cards, or account registration locations can provide clues but cannot independently determine the outcome. If a person is simultaneously a tax resident in two jurisdictions according to local laws, the self-certification should truthfully list all applicable jurisdictions and cannot simply select one based on avoidance of double taxation arrangements.

When the bill was passed, the Legislative Council also adopted the amendments proposed by the government. KPMG expects the revised regulations to be published in the gazette on November 13, with specific implementation still subject to the gazette text and subsequent guidelines from the tax bureau.

### Who needs to report, and what transactions will be recorded?

Under CARF, the primary reporting obligation falls on eligible crypto asset service providers, covering exchanges, brokers, and dealers that conduct fiat-to-crypto and crypto-to-crypto exchanges on behalf of clients, as well as institutions providing related trading platforms.

Whether service providers need to fulfill obligations in Hong Kong also depends on their connection to Hong Kong. Hong Kong tax residents, entities established in Hong Kong that meet relevant conditions, entities managed from Hong Kong, and service providers with a permanent establishment in Hong Kong may all fall under the rules. Cross-border platforms must also consider which entity or branch provides the service and the relevant regulations of other jurisdictions, and cannot determine reporting obligations solely based on the app name.

According to the original draft, reporting service providers that meet Hong Kong's related rules must register by January 31 of the next calendar year after first becoming eligible, even if there is no information to report that year. For example, if they first become eligible in 2027, the registration deadline would be January 31, 2028.

For users, the most intuitive change is that the information that trading platforms need to collect is more detailed. **According to the tax bureau's explanation, the identity information of users who meet reporting conditions may include name, address, tax residency location, tax identification number, and date of birth. If the account holder is an entity, in certain cases, it may also be necessary to identify the actual controller's identity and tax residency location.**

**Transaction information will be summarized by asset and transaction category, involving currency names, total transaction amounts or fair market values, asset quantities, and transaction counts. The reporting scope includes buying crypto with fiat, selling crypto for fiat, crypto-to-crypto exchanges, and related asset transfers processed by service providers.**

For example, if a user who meets reporting conditions buys BTC on a platform subject to Hong Kong rules, then exchanges some BTC for ETH, and later transfers ETH to an external wallet, the fiat purchase, crypto-to-crypto exchange, and transfer out may all enter the platform's reporting records. The platform reports categorized summary information as required by the rules, while the specific taxable income still needs to be calculated based on acquisition costs, transaction nature, and applicable tax laws.

**The definition of relevant crypto assets covers transferable or tradable fungible and non-fungible tokens, with BTC, ETH, and stablecoins used for payment or investment typically falling within the scope to consider, while NFTs with investment purposes may also be included. Central bank digital currencies and specific electronic currency products that meet statutory definitions are excluded from CARF, but certain products may fall under the revised CRS.**

It is noteworthy that transfers to self-custodied wallets may also be recorded. The draft requires service providers to summarize the quantity and fair market value of outgoing assets for external addresses that cannot be confirmed as associated with virtual asset service providers or financial institutions.

The draft also includes a threshold of HKD 390,000 for retail payment transactions that meet specific conditions, including situations where service providers process payments on behalf of merchants. This figure cannot be taken as a uniform exemption limit for all crypto asset transactions; general exchanges and transfers need to be judged according to their applicable rules.

### What impact do residents of mainland China, Hong Kong, and other regions face?

For tax residents in mainland China, it is first necessary to look at the final list of CARF reporting tax jurisdictions published by the Hong Kong tax bureau, as well as the information exchange arrangements established between Hong Kong and relevant regions. So far, the Hong Kong tax bureau has stated that it will publish the relevant list in due course, and it has not yet clarified whether the mainland will be among the first batch of CARF reporting and exchange targets.

Both mainland China and Hong Kong have participated in traditional CRS financial account information exchanges, but the participation in traditional CRS cannot directly replace the CARF list and exchange arrangements. **According to the OECD's updated CARF implementation commitment list as of September 14, 2026, Hong Kong is listed among the regions scheduled for the first exchange in 2028, while mainland China is not included in that commitment list.**

However, this does not imply that residents of the mainland will never be included in the relevant arrangements. There are still other tax information exchange and assistance mechanisms between Hong Kong and the mainland, and whether specific information can be obtained depends on applicable laws, arrangements, and individual case conditions.

Even if a user's tax residency location is not yet listed in the reporting list, the platform can still conduct due diligence according to the rules and collect information such as tax residency status. The collection of account information by the platform does not equate to that information being submitted to the tax bureau, nor does it mean that it has been automatically exchanged with the tax authorities of another jurisdiction.

For Hong Kong tax residents, if they are only tax residents of Hong Kong, it is necessary to consider the location of the platform used and the applicable reporting rules. When using a Hong Kong platform, the platform may still require tax self-certification; if using a platform from regions like the UK that have implemented CARF, local rules may require the platform to report transaction information for local residents or residents of designated regions to local tax authorities. Whether relevant information is exchanged with Hong Kong will also depend on the local list and the exchange relationship between the two parties.

For individuals who meet the tax residency conditions of both Hong Kong and the mainland, obtaining a Hong Kong identity card or proof of Hong Kong residency does not automatically eliminate their tax residency status in the mainland. When the platform requests self-certification, it should truthfully list the tax residency locations of both jurisdictions according to their respective laws. As for which party will tax specific income and how to avoid double taxation, it needs to be judged based on tax arrangements and individual circumstances.

Residents of places like Singapore, the UK, and the US should also distinguish their respective implementation timelines. The OECD list shows that the UK plans to first exchange CARF information by 2027 at the latest, while Singapore and Hong Kong aim for 2028, and the US for 2029. These timelines represent commitments made by each region and do not indicate that Hong Kong has established effective exchange relationships with each of those regions. The rules of the UK tax authorities also require local service providers to report relevant information for UK residents and residents of the listed regions.

As of September 14, 2026, the OECD statistics show that a total of 77 tax jurisdictions have committed to implementing CARF, with 46 planning to exchange for the first time by 2027 at the latest, 27 planning to exchange in 2028, and another 4 planning to exchange in 2029. The specific implementation progress and exchange partners of each region still need to be confirmed separately.

### After information is reported, do users have to pay taxes?

CARF specifies the procedures for service providers to collect, report, and exchange information with tax authorities, but it does not establish a globally uniform tax rate for crypto assets. Whether the tax authority that receives the information will impose taxes, and under what tax categories, still depends on local tax laws, individual identities, and the actual nature of the transactions.

Taking Hong Kong as an example, tax treatment needs to consider the purpose of asset holding, the nature of transactions, and the source of profits. Capital gains from disposals may be treated differently from operating transaction profits; one cannot assert that all transaction profits are tax-exempt simply because they use a Hong Kong exchange.

**If the relevant profits are subject to profits tax in Hong Kong, corporations meeting the two-tier tax rate conditions will have the first HKD 2 million of assessable profits taxed at a rate of 8.25%, with the excess taxed at 16.5%; qualifying unincorporated businesses, such as sole proprietorships or partnerships, will have the first HKD 2 million of assessable profits taxed at a rate of 7.5%, with the excess taxed at 15%. Related entities must also meet the applicable conditions of the two-tier system. These tax rates apply to assessable profits, and factors such as high-frequency trading, use of leverage, or trading bots also need to be considered with other facts to determine whether the transactions belong to business operations and the source of profits.**

For tax residents in mainland China, one cannot simply deduce tax liabilities based on "the trading volume reported by the Hong Kong platform." The total transaction volume does not equal profit; acquisition costs, selling income, acquisition methods, transaction locations, and corresponding tax law provisions will all affect specific judgments. When organizing records, cryptocurrency holders should not only retain platform statements but also keep records of asset acquisition costs, transfers between different accounts, and related vouchers to avoid misinterpreting the transfer of the same batch of assets as new income.

**According to the Mainland's "Individual Income Tax Law," resident individuals are required to pay taxes on income from both domestic and foreign sources; for income derived from property transfers, a tax rate of 20% applies, calculated based on the balance after deducting the original value of the property and reasonable expenses from the transfer income. The specific tax categories and applicable methods for cryptocurrency asset transactions need to be determined based on actual circumstances and relevant regulations, and the 20% tax rate cannot be directly applied to all cryptocurrency asset income.**

Users must also fill out their self-certification truthfully. According to the original draft and government consultation documents, knowingly or negligently providing false, misleading, or inaccurate information on important matters in self-certification may result in a third-level fine, with a maximum of 10,000 Hong Kong dollars upon conviction. The platform is required to fulfill responsibilities such as registration, due diligence, reporting, and record-keeping, and violations may face criminal or administrative penalties.

Next, the Hong Kong Inland Revenue Department needs to publish the list of CARF reporting tax jurisdictions and partner tax jurisdictions, as well as the reporting system and implementation guidelines. For platform users, the due diligence requirements applicable starting in 2027, along with the subsequently published lists, will determine what additional information needs to be provided and which transaction details need to be reported.