Comparing CRS with FATCA

Comparing between model 1-IGA and model 2-IGA

Usefual references


Comparing CRS with FATCA


Information Reporting


Under the CRS framework, a reporting financial institution is required to report the financial account information to the tax authority of the jurisdiction in which it resides (excluding any branch located outside that jurisdiciton) or a branch located in it if the financial institution is a resident of another jurisdiction. The tax authority will automatically report the relevant information to the partner jurisdiction with which there is a double tax treaty (DTT) or tax information exchange agreement (TIEA) in place.


Under section 50B of the Hong Kong Inland Revenue Ordinance, a reporting financial institution is under a legal obligation to report the required information to the HK tax authority (the Inland Revenue Department). The IRD will automatically report the reportable information to the partner jurisdiction with which HK has signed a DTT or TIEA.


Under the IGA between the U.S. and Hong Kong, a reporting HK financial institution (an FFI) must obtain the consent of the account holder or the non-participating FFI before it can disclose the reportable information to the IRS. Upon a request made by the U.S. competent authority (the Secretary of the Treasury), Hong Kong will provide the US with the requested information pursuant to the TIEA concluded between HK and the USA.


In essence, HK-US intergovernment agreement is not falling under the scope of AEOI. Rather it falls under the scope of exchange of information upon request (EOIR).


Hong Kong and the U.S. have concluded a Model II-IGA, pursuant to which financial account information will flow from Hong Kong financial institutions to the IRS in the U.S. but the financial account information will not flow from the U.S. financial institutions to the tax authority in Hong Kong. The information flow is asymmetical under the FATCA regime while the information flow is reciprical under the CRS regime.


Withholding Obligations


A reporting Financial Institution under the CRS has no withholding obligations while a reporting foreign institution under Model ii-IGA has the obligation to withhold tax on payments of US-source income to non-consenting account-holders if the Model-ii tax authority fails to respond to U.S. requests made in connection with the non-consenting accountholders under the DTA or the Tax information exchange agreement.



Comparing between Model 1-IGA and Model2-IGA


FFI Agreement


The FFIs under Model 2-IGA should sign an FFI Agreement with the U.S. Treasury, to become a participating FFI. If an FFI does not do so, the FFI is a non-participating FFI.  Jurisdictions entering Model 2-IGA include Japan, Hong Kong, Macau, and Taiwan.

However, there is no requirement for the FFIs under Model 2-IGA to sign an FFI Agreement. Jurisdictions entering Model 1-IGA include BVI, Cayman Islands, China, and Singapore.


Information reporting


Under Model 1-IGA, the FFIs will report the financial account information to the tax authority of the jurisdiction in which it is either resident or located. The tax authority will automatically report the same information to the IRS.  If there is a reciprocal arrangement under the Model 1-IGA, the information reporting will flow the other way.


Under Model 2-IGA, the FFIs will directly report the financial account information to the IRS. Before the FFIs can do the reporting, they must obtain the consent from the account holder or non-participating FFIs. If the FFIs cannot obtain the consent, they must provide the IRS with the aggregate account information of those non-consenting persons. The IRS will make a group request about the non-consenting persons from the tax authority under the DTA or TIEA.


List of Model 1-IGA and Model 2-IGA jurisdictions

{Model1 and model 2 jurisdictions}



Reference Articles and PPT slides

  • I Got 99 Problems and They ' re All FATCA {Read}
  • Recent Developments in Hong Kong's Exchange of Information Rules {Read} [* copyright given up for 18 months. It is pre-publication version. Please contact the author for published version at]
  • Training course organized by the HK Institute of Bankers, Part 10 {Read}
  • Comments on Hong Kong's AEOI Legal Framework {Read}