Hong Kong’s Legislative Council on Nov. 4 passed the Inland Revenue (Amendment) (Tax Reporting Framework for Crypto-Assets and Amended Common Reporting Standard) Bill 2026. Under the current timetable, Hong Kong plans to begin collecting relevant crypto-asset transaction data in 2027 and start exchanging that information with relevant tax jurisdictions in 2028. Whether mainland China residents will be included in the first batch still depends on a list that Hong Kong has yet to publish.
That means trading Bitcoin in Hong Kong, swapping USDT for other tokens, or moving crypto assets from an exchange to an external wallet could all become part of tax information reporting in the future.
Two reporting regimes, two timelines
The bill covers two separate international information-sharing regimes, and they do not start at the same time.
The Crypto-Asset Reporting Framework, or CARF, will take effect on Jan. 1, 2027. In-scope service providers will begin collecting information in 2027, and Hong Kong plans to start exchanging that information with relevant tax jurisdictions in 2028.
The amended Common Reporting Standard, or CRS, will take effect on Jan. 1, 2028. Hong Kong plans to begin exchanging financial account information under the revised standard in 2029.
The arrangement has raised several practical questions for crypto holders: who receives the information when a user trades through a Hong Kong exchange, whether transaction records of mainland China tax residents could be sent back to the mainland, and whether holding Hong Kong status removes overseas tax exposure.
Based on the legislative text and the Inland Revenue Department’s explanation, three stages need to be separated. First, a platform collects information. Second, it reports that information to Hong Kong’s tax authority. Third, Hong Kong may exchange the information with another tax jurisdiction. A user’s tax residency, the entity operating the exchange, the type of transaction, and the final list published by Hong Kong all affect the outcome.
When exchanges start collecting information
The legislation touches two related but different systems.
CRS is the Organisation for Economic Co-operation and Development’s standard for the automatic exchange of financial account information for tax purposes. Hong Kong has already implemented CRS. Banks, some insurers, and other financial institutions identify customers’ tax residency and report relevant account information to the Inland Revenue Department. This round of amendments expands the scope of covered digital financial products and adds due diligence and reporting requirements.
According to the Inland Revenue Department, CRS information for exchange includes account numbers, year-end balances or values, and, where applicable, interest, dividends, and gross proceeds from the sale of financial assets. For crypto trading accounts, the result depends on the account type, the status of the service provider, and whether CARF or the amended CRS applies.
CARF is designed specifically for crypto-asset transaction information. Crypto exchanges, brokers, and other service providers that meet the relevant conditions must identify users, collect transaction data, and report it to tax authorities. Tax authorities may then exchange the information with relevant jurisdictions under applicable arrangements.
The first CARF data collection year will be 2027, and existing accounts will also need supplemental information. Under the original bill, users whose relationship with a service provider was established on or before Dec. 31, 2026 must have a self-certification obtained by Jan. 1, 2028.
A self-certification is the user’s declaration of tax residency to the platform. It includes items such as name, address, jurisdiction of tax residence, and tax identification number. For new users, the service provider must obtain the certification at onboarding and check whether it is reasonable. Existing users may receive follow-up requests when they update customer information.
Tax residency is determined under the tax law of the relevant jurisdiction. A passport, identity card, or account registration location may offer clues, but none of them alone decides the result. If a person is treated as a tax resident in two places under local law, the self-certification should list all applicable jurisdictions. The article says users should not pick only one jurisdiction when filing.
When the bill was passed, the Legislative Council also adopted government amendments. KPMG expects the amended ordinance to be gazetted on Nov. 13. Actual implementation will still depend on the gazetted text and later guidance from the Inland Revenue Department.
Who reports, and which transactions are covered
Under CARF, the main reporting obligation falls on in-scope crypto-asset service providers. That includes exchanges, brokers, dealers, and other institutions that, as a business, carry out fiat-to-crypto or crypto-to-crypto transactions for customers. It also includes institutions that provide the relevant trading platforms.
Whether a service provider must comply in Hong Kong depends on its connection to Hong Kong. A Hong Kong tax resident, an entity incorporated in Hong Kong that meets the relevant conditions, an entity managed from Hong Kong, or a provider with a permanent establishment in Hong Kong may all fall within scope. For cross-border platforms, the analysis also depends on which entity or branch actually provides the business and on rules in other jurisdictions. The article says the name of an app alone is not enough to determine which entity reports.
Under the original bill, a reporting service provider that falls within Hong Kong’s nexus rules must register by Jan. 31 of the calendar year following the first year in which it becomes in scope. Registration is required even if there is no reportable information for that year. If a provider first becomes in scope in 2027, for example, the registration deadline would be Jan. 31, 2028.
For users, the most visible change is that platforms may collect more detailed information. According to the Inland Revenue Department, identity information for reportable users may include name, address, jurisdiction of tax residence, tax identification number, and date of birth. If the account holder is an entity, the identity and tax residency of controlling persons may also need to be identified in some cases.
Transaction information is reported in aggregate by asset and transaction category. It may include the name of the token, total transaction amount or fair market value, asset quantity, and number of transactions. Covered categories include buying crypto with fiat, selling crypto for fiat, crypto-to-crypto swaps, and transfers in and out handled by the service provider.
The article gives an example. If a reportable user buys BTC on a platform subject to Hong Kong rules, later swaps part of that BTC for ETH, and then transfers the ETH to an external wallet, the fiat purchase, the crypto-to-crypto swap, and the outbound transfer could all enter the platform’s reporting record. What the platform reports is the categorized aggregate information required by the rules. Taxable income, if any, still has to be determined under the applicable tax law with reference to acquisition cost and the nature of the transaction.
The definition of relevant crypto-assets covers transferable or tradable fungible and non-fungible tokens. BTC, ETH, and stablecoins used for payment or investment would usually need to be considered. NFTs with an investment function may also be covered. Central bank digital currencies and certain electronic money products that meet statutory definitions are excluded from CARF, though some products may fall under the amended CRS.
Transfers to self-hosted wallets may also be recorded. The draft requires service providers to aggregate the quantity and fair market value of assets transferred out to external addresses that cannot be confirmed as linked to a virtual asset service provider or a financial institution.
The draft also contains a HK$390,000 threshold for certain retail payment transactions, including cases where a service provider processes payments for merchants. The article says that figure should not be treated as a universal exemption threshold for all crypto transactions. Ordinary swaps and transfers still need to be assessed under the rules that apply to them.
What it means for mainland China, Hong Kong, and other residents
For mainland China tax residents, the first question is whether Hong Kong’s Inland Revenue Department will include the mainland on its final CARF reportable jurisdiction list and whether Hong Kong has established the necessary exchange arrangements with that jurisdiction. So far, the department has said the relevant list will be published in due course. It has not confirmed whether mainland China will be among the first CARF reporting and exchange destinations.
Mainland China and Hong Kong already participate in financial account information exchange under the traditional CRS. But participation in CRS does not automatically substitute for the CARF list or CARF exchange arrangements. According to the OECD’s CARF implementation commitment list updated as of Sept. 14, 2026, Hong Kong is listed among jurisdictions planning a first exchange in 2028, while mainland China is not included on that commitment list.
The article also says that does not support a conclusion that mainland residents will never be brought into the arrangement. Hong Kong and the mainland have other tax information exchange and assistance mechanisms, and whether a particular item of information can be obtained depends on the applicable law, the relevant arrangement, and the facts of the case.
Even if a user’s jurisdiction of tax residence is not yet on a reportable list, a platform may still carry out due diligence and collect tax residency information under the rules. Information collected by a platform is not the same as information already filed with the tax authority, and it is not the same as information already exchanged automatically with another tax authority.
For Hong Kong tax residents who are tax resident only in Hong Kong, the result depends on where the platform is located and which reporting rules apply. A Hong Kong platform may still ask for a tax self-certification. If the user trades on a platform in a jurisdiction that has implemented CARF, such as the United Kingdom, local rules may require the platform to report transaction information for local residents or residents of listed jurisdictions to the local tax authority. Whether that information is then exchanged with Hong Kong depends on the local list and the exchange relationship between the two sides.
For people who meet the tax residency conditions of both Hong Kong and mainland China, obtaining a Hong Kong identity card or proof of Hong Kong residency does not automatically remove mainland tax residency. When a platform asks for a self-certification, the user should list the jurisdictions of tax residence truthfully under the laws of both places. Which side taxes a particular item of income, and how double taxation is addressed, requires a separate analysis based on the tax arrangement and the individual facts.
Residents of Singapore, the United Kingdom, the United States, and other places also need to distinguish between implementation timelines. The OECD list shows that the United Kingdom plans a first CARF exchange no later than 2027, Singapore and Hong Kong in 2028, and the United States in 2029. The article notes that these dates are implementation commitments made by those jurisdictions. They do not mean Hong Kong has already established an effective exchange relationship with each of them. UK tax rules also require local service providers to report relevant information for UK residents and residents of jurisdictions on the list.
According to OECD statistics as of Sept. 14, 2026, 77 tax jurisdictions had committed to implement CARF. Of those, 46 planned a first exchange no later than 2027, 27 planned exchange in 2028, and 4 planned exchange in 2029. Actual implementation progress and exchange partners still need to be checked jurisdiction by jurisdiction.
Does reporting automatically create a tax bill?
CARF sets out procedures for collection, reporting, and exchange of information. It does not create a single global tax rate for crypto assets. Whether a tax authority imposes tax after receiving the information, and under which tax category, still depends on local tax law, the taxpayer’s status, and the actual nature of the transaction.
In Hong Kong, tax treatment depends on the purpose for holding the asset, the nature of the transaction, and the source of the profit. Disposal gains of a capital nature and profits from trading as a business may be treated differently. The article says it is not correct to assume that all trading profits are tax-free simply because a user traded through a Hong Kong exchange.
If profits are subject to Hong Kong profits tax, a corporation that qualifies for the two-tier rates is taxed at 8.25% on the first HK$2 million of assessable profits and 16.5% on the remainder. For a qualifying unincorporated business, such as a sole proprietorship or partnership, the rate is 7.5% on the first HK$2 million of assessable profits and 15% on the remainder. Associated entities and others must also satisfy the conditions for the two-tier regime. The article adds that high-frequency trading, leverage, or the use of trading bots may also matter when deciding whether the activity amounts to a business and where the profit is sourced.
For mainland China tax residents, the article says a reported transaction amount from a Hong Kong platform is not enough to calculate tax due. Gross transaction value is not the same as profit. Acquisition cost, sale proceeds, the way the asset was obtained, where the transaction took place, and the applicable tax rules all affect the analysis. Users organizing their records should keep not only platform statements but also evidence of acquisition cost, transfers between accounts, and related supporting documents, so that transfers of the same assets are not mistaken for new income.
Under mainland China’s Individual Income Tax Law, resident individuals pay tax on domestic and overseas income according to law. For income from the transfer of property, the applicable proportional tax rate is 20%, and taxable income is calculated as the balance after deducting the original value of the property and reasonable expenses from the transfer income. The article also says the specific tax category and application for crypto-asset transactions depend on the actual facts and relevant rules, and the 20% rate cannot simply be applied to all crypto-related income.
Users also need to complete self-certifications truthfully. Under the original bill and government consultation documents, a person who knowingly or recklessly provides false, misleading, or inaccurate information on a material matter in a self-certification may, upon conviction, face a level 3 fine of up to HK$10,000. Platforms, for their part, must meet obligations on registration, due diligence, reporting, and record retention. Violations may lead to criminal or administrative penalties.
The next steps are for Hong Kong’s Inland Revenue Department to publish the list of CARF reportable tax jurisdictions and partner tax jurisdictions, along with the reporting system and implementation guidance. For platform users, the due diligence requirements that start in 2027, and the lists published after that, will determine what additional information must be provided and which transaction data must be reported.
