Hong Kong Expands Crypto Tax Reporting to 8,000 More Firms

• Hong Kong advances CARF crypto tax rules, adding 8,000 firms to reporting obligations from 2027.
• Automatic crypto tax data sharing between OECD partner jurisdictions begins in 2028. 
• Exchanges, banks, and brokers must collect KYC data and retain transaction records for six years.

Hong Kong is moving ahead with new crypto tax reporting rules that bring around 8,000 more financial institutions under mandatory registration and reporting requirements.

The move follows the passage of the Inland Revenue (Amendment) Bill 2026, which implements the OECD’s Crypto-Asset Reporting Framework (CARF) and updates the Common Reporting Standard. 

8,000+ Firms to Report Crypto Activity

Notably, legislative Council member Chan Wai-man said the new framework will require about 8,000 additional financial institutions to register and comply with crypto tax reporting rules.

The expansion is one of Hong Kong’s biggest regulatory steps for crypto. It extends tax reporting beyond licensed crypto exchanges to include financial institutions that provide crypto services.

Chan also revealed that authorities collected more than HK$100 million in back taxes and penalties linked to crypto assets between 2018 and 2025. 

CARF Rules Begin in 2027

The new regime is based on the Organization for Economic Co-operation and Development’s (OECD) Crypto-Asset Reporting Framework. Introduced in 2023, CARF supports the automatic exchange of tax information on crypto transactions between participating jurisdictions.

Hong Kong’s Inland Revenue Department said Reporting Crypto-Asset Service Providers (RCASPs) that meet the jurisdiction’s nexus rules must register, carry out customer due diligence, and submit annual reports starting Jan. 1, 2027.

The government also plans to begin its first automatic exchange of crypto tax information with partner jurisdictions in 2028, provided the legislation is fully enacted.

Which Businesses Will Be Covered?

The reporting rules apply to businesses that facilitate crypto transactions or provide custody services for customers.

Specifically, they cover crypto exchanges, brokers, market makers, dealers that trade directly with customers, crypto ATM operators, and other businesses that exchange crypto assets or convert crypto into fiat currencies.

These firms must collect customer identification information as part of due diligence procedures. They must also report annual transaction data, including crypto transfers, crypto-to-fiat conversions, and crypto-to-crypto trades.

The framework does not apply to central bank digital currencies (CBDCs), specified electronic money products, or crypto assets that cannot reasonably be used for payment or investment.

Registration Requirements

Hong Kong will launch a CARF Portal for registration. All crypto service providers must register, even if they have no reportable transactions during a reporting year.

Businesses must keep compliance records for six years. They must also submit annual reports containing customer identification details and aggregated transaction data.

The proposed law includes penalties for failing to register, complete due diligence, submit accurate reports, or notify authorities of incorrect filings. In some cases, penalties may increase depending on how long the business remains non-compliant or how many customers are affected.

Part of a Global Transparency Drive

Hong Kong is joining jurisdictions like Singapore, Japan, and the European Union in strengthening crypto tax transparency with standardized reporting rules.

The framework seeks to improve regulatory certainty and boost investor confidence. But smaller crypto firms may face higher compliance costs as they upgrade reporting systems and internal controls.

Once implemented, Hong Kong’s CARF regime will further integrate crypto into the city’s regulated financial system to improve cross-border cooperation on crypto taxation.

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