Every year we ask clients to list what the company owns at the year-end date. Last month one answered: "about USD 400,000 of USDT, but it sits on Binance, not in the company bank account." That used to be a private matter between the director and his exchange. From 1 January 2027 it is not.

On 4 November 2026 the Legislative Council passed the Inland Revenue (Amendment) (Crypto-Asset Reporting Framework and Amended Common Reporting Standard) Bill 2026, with the Amendment Ordinance expected in the Gazette around 13 November. Here is what changes, and what to fix before the clock starts.

Reporting, not a new tax

This law does not create a crypto tax; Hong Kong still has no capital gains tax. What it builds is a data pipeline. Crypto-asset service providers with a Hong Kong nexus must register with the Inland Revenue Department, run due diligence on their users, and file annual returns of aggregated transaction data. The IRD then exchanges that data with partner jurisdictions, starting in 2028.

The amended Common Reporting Standard does the same for financial accounts and pulls in digital financial products: central bank digital currencies, specified e-money, derivatives referencing crypto-assets, and investment entities holding them. That side starts on 1 January 2028, with exchanges from 2029.

The dates that matter

• 1 January 2027 — CARF duties begin. First reporting period is calendar 2027.
• 1 January 2028 — self-certifications from pre-existing users (anyone with a relationship on 31 December 2026) must be obtained.
• 31 January 2028 — registration deadline for a provider whose Hong Kong nexus first arises in 2027.
• 2028 — first automatic exchange of crypto-asset data with partner jurisdictions.
• 2028 / 2029 — amended CRS takes effect, then the first exchanges under it.

Who counts as a provider

A reporting crypto-asset service provider is a business that, for or on behalf of customers, effects exchange transactions — crypto against fiat, or crypto against crypto — whether as counterparty, intermediary or platform operator. The Hong Kong nexus test catches you if you are tax resident here, incorporated or organised here, managed from here, or you keep a regular place of business here.

It is not only exchanges. An OTC desk, a broker routing client orders, a payment business converting stablecoins — all can sit inside the definition. If a Hong Kong company runs any of that as a real business line, get a written scope opinion rather than assuming you are outside.

What gets reported about a user

Name, address, jurisdiction of tax residence and taxpayer identification number, plus controlling persons where the user is an entity. Then the numbers: gross amount paid and received per crypto-asset, units, number of transactions, and transfers to external wallets the provider cannot attribute to another reporting provider — aggregated by asset type and payment rail.

Relevant crypto-assets exclude central bank digital currencies and specified e-money products. Non-fungible tokens are not automatically in or out — they are tested on whether they can be used for payment or investment.

Why an ordinary trading company should care

Because the numbers now have a second source. If your audited accounts show no digital assets while the director's exchange account shows HKD 3 million of turnover tied to the company email and corporate bank account, someone will eventually ask which version is right.

Three patterns we see. Crypto held by the company but never booked, so the balance sheet is wrong and the audit report is technically a misstatement. Trading gains pushed into "other income" with no profits tax analysis — crypto held as trading stock is taxable at 8.25% on the first HKD 2 million of assessable profits and 16.5% above. And a director running personal trades through the company account, which raises a Hong Kong question and, for a mainland-resident beneficial owner, a PRC individual income tax question too.

Six things to do before January

• List every account. Company wallets and exchange accounts, with the entity name, business registration number and who controls each one.
• Book the balances. Year-end fair value, realised and unrealised movements, and the accounting policy in the notes.
• Match tax residence. The address and TIN at your exchange should match what your bank and the IRD hold. A mismatch is the fastest way to be flagged.
• Decide trading versus investment. That call drives profits tax and needs evidence: frequency, holding period, funding source.
• Keep six years of records. CARF record-keeping runs six years from the return due date.
• Do not assume your home jurisdiction is out. Exchange happens only with jurisdictions on the IRD's published partner list, and that list is not out yet.

Penalties are not theoretical. A knowingly or recklessly misleading self-certification sits at level 3, a HKD 10,000 fine; the more serious CARF offences reach a level 6 fine of HKD 100,000 and up to three years' imprisonment. Providers that are also financial institutions get relief from double reporting where the same proceeds are already reported under the CRS.

What to do this quarter

If your Hong Kong company holds digital assets, or you are adding a digital-asset line to a trading business, settle the accounting and tax treatment before the first CARF year closes, not after. The work is unglamorous: reconcile wallets, book balances, fix self-certifications, document trading intention. It is also far cheaper than answering an enquiry two years later.

Lemon Accountancy handles Hong Kong company audit, profits tax filing and cross-border structuring for owners in Hong Kong and the mainland. Send the wallet and exchange list to info@lcpa.com.cn or call 00852-55749538 and we will tell you what needs fixing before 1 January 2027.

This article is general information on the Inland Revenue (Amendment) (Crypto-Asset Reporting Framework and Amended Common Reporting Standard) Bill 2026 as passed on 4 November 2026. It is not tax or legal advice, and the Amendment Ordinance and IRD guidance may refine the details. Speak to a qualified adviser about your own facts.