The answer is yes. After the implementation of CRS, as long as you are Chinese (regardless of immigration) and have the following financial assets overseas (including Hong Kong): deposit accounts, custody accounts, cash value insurance policies, annuities Contracts, securities accounts, futures accounts, holding equity/debt rights and interests in financial institutions, etc. The countries or regions where the above-mentioned financial assets are stored will also disclose the financial assets held by the holders to the mainland China tax bureau.

On the other hand, according to the implementation details of CRS, employees of financial institutions may face being questioned by the institutions about the customers they serve. At the same time, there are also certain occupational risks, because CRS standards stipulate that if financial practitioners induce customers to make false statements or deceive the financial institutions they work for and fail to make truthful statements, they will not only face fines, but may also be criminally prosecuted.

How to define tax residence?

Tax residency is not the same as nationality (passport). Each country has strict definitions of tax residents in its own country. Generally speaking, foreigners who have settled in a certain country for a long time are often regarded as tax residents of that country.

For example, Ms. Li is a Chinese national (holds a Chinese passport), has worked in Hong Kong for 5 years, and has a deposit of HK$500,000 in HSBC Bank in Hong Kong. At the same time, Ms. Li also has a deposit of 1 million yuan in the Bank of China in China. In this case, because both China and Hong Kong are CRS participants, HSBC and Bank of China have different compliance requirements for Ms. Li’s deposits under CRS rules:

HSBC: Need to identify The account owner holding 500,000 Hong Kong dollars holds information. Through identification, it was found that Ms. Li holds a Chinese passport and her nationality is Chinese. However, from the perspective of tax law, Ms. Li is a tax resident of Hong Kong. Under CRS, financial institutions only need to declare the account information of foreign tax residents, so HSBC does not need to pass Ms. Li's information to the Chinese government through the Hong Kong government.

Bank of China: By identifying the account holder information of the 1 million RMB. Through due diligence, Bank of China discovered that the account holder, Ms. Li, lived overseas and declared herself a Hong Kong tax resident. At this time, Bank of China must pass Ms. Li's basic personal information, 1 million yuan deposit and related interest income or other income related to the account to the Hong Kong government through the Chinese government in accordance with the provisions of the CRS. The Hong Kong government will then handle it according to its own laws.

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