Canada-Hong Kong Tax Agreement – Arrangement signed between competent authorities on the exchange of Country-by-Country Reports

On June 17, 2019, the Canada Revenue Agency (CRA) and the Hong Kong Inland Revenue Department signed an arrangement to exchange Country-by-Country Reports.  

These reports are forms that multinational enterprise groups (MNEs) are required to complete and file annually to provide information on their global operations in each tax jurisdiction where they do business. This filing requirement is part of a global initiative by the Organisation for Economic Co-operation and Development (OECD) to enhance transparency for tax administrations.

The information exchanged is confidential and protected under the provisions of the tax agreement between Hong Kong and Canada, signed on November 11, 2012.

Hong Kong will exchange reports for MNE groups that have a fiscal year starting in 2017 or 2018. Canada will exchange reports for any MNE group that has a fiscal year starting in 2018. Each country must exchange its report on a MNE group within 18 months of the group’s fiscal year-end.

This arrangement follows the country-by-country reporting standard developed by the OECD and adopted for the Action Plan on Base Erosion and Profit Shifting, a plan agreed to by OECD and G20 member countries. 

In addition to this arrangement with Hong Kong, Canada exchanges these reports with a number of international partners. This exchange of information helps the CRA to better risk assess the tax compliance of MNE groups.