Written by: Xie Yancen

【Research Scope】This report systematically sorts out the tax rules regarding digital assets in Hong Kong from 2020 to the present. We analyzed various guidelines released by the Hong Kong Inland Revenue Department, regulatory documents published by the Securities and Futures Commission and the Monetary Authority, relevant ordinances passed by the Legislative Council, as well as policy declarations issued by the government to provide readers with a comprehensive and clear regulatory picture.

【Core Conclusion】Reviewing the development over these years, Hong Kong's digital asset tax regulation has followed a clear path: first, in 2020, the basic principles for the tax treatment of digital assets were established through DIPN 39, followed by the gradual completion of various regulatory documents (trading platforms, staking services, stablecoins) to support tax collection, then the implementation of a cryptocurrency asset reporting framework (CARF) through legislation, and finally the provision of tax incentives through policy declarations. Overall, the regulatory trend is becoming more standardized, more transparent, and increasingly aligned with international standards.

Chapter 1 Evolution of Hong Kong's Digital Asset Tax Regulation

1.1 Foundation Period (2020): Establishing Basic Principles

2020 was an important turning point for Hong Kong's digital asset tax regulation. In that year, the Inland Revenue Department published the revised "Tax Ordinance Interpretation and Practice Notes No. 39" (DIPN 39), which was the first official guidance on digital asset taxation. The core contribution of this guidance was the first clear definition of the treatment principles for digital assets under Hong Kong's tax system: adhering to the territorial tax principle as per Article 14 of the Tax Ordinance, only profits generated in Hong Kong or derived from Hong Kong would be subject to profits tax.

With this basic principle established, the Inland Revenue Department also created a basic tax framework that covered the determination of the nature of digital asset transactions (business profits vs. capital gains), income from airdrops and forks, cryptocurrency compensation, ICO, and other common scenarios. This framework was pioneering at the time and laid the groundwork for subsequent rule refinements. Although initially covering only basic trading scenarios, it clearly defined the tax attributes of digital assets in 2020, enhancing compliance certainty.

1.2 Regulatory Support Period (2023-2025): Improving Regulatory Infrastructure

As the digital asset market developed, Hong Kong gradually established a comprehensive regulatory infrastructure. These documents, although not direct tax documents, provided important support for tax collection. In June 2023, the Hong Kong Securities and Futures Commission issued “Guidelines for Virtual Asset Trading Platform Operators,” clarifying licensing requirements, client asset segregation, transaction record retention (no less than 7 years), and regulatory collaboration mechanisms to provide important data bases for tax authorities in conducting tax assessments, verifications, and collections.

In April 2025, the Securities and Futures Commission and the Monetary Authority simultaneously released regulatory documents on virtual asset staking services, clarifying the access standards for different types of institutions conducting staking businesses, client asset segregation, and information disclosure requirements, particularly emphasizing the requirement for income records to be retained for no less than 7 years, achieving synergy in regulation and tax collection. In August 2025, the "Stablecoin Ordinance" officially came into effect, marking Hong Kong's first regulation specifically targeting stablecoins, clarifying the tax responsibilities of stablecoin issuers and service providers, delineating taxable behaviors and tax handling standards, and linking to Hong Kong's Tax Ordinance and virtual asset tax regulation rules.

1.3 International Alignment Period (2025-2026): Cross-Border Information Exchange

In December 2025, the Hong Kong Financial Services and the Treasury Bureau and the Inland Revenue Department jointly released a consultation document on "Implementation of the Crypto Asset Reporting Framework and Amendments to the Common Reporting Standard," marking the formal inclusion of crypto assets into the cross-border tax information exchange system in Hong Kong. The document states that Hong Kong plans to submit relevant legislative proposals to the Legislative Council in 2026, formally commence collection of CARF-required information in 2027, and implement automatic information exchange with cooperating jurisdictions in 2028.

In January 2026, the Legislative Council published the "Tax Ordinance Amendment Bill (Implementation of Crypto Asset Reporting Framework and Amendments to Common Reporting Standard)," further clarifying the core requirements for crypto asset information reporting, key points of CRS amendments, compliance responsibilities, and penalties, along with the collaborative requirements with virtual asset staking services. The focus of this stage is to achieve alignment with the OECD crypto asset reporting framework (CARF), incorporating crypto assets into the cross-border tax information exchange system.

1.4 Tax Incentive Period (2025): Providing Policy Support

In June 2025, the Hong Kong Financial Services and the Treasury Bureau issued the "Digital Asset Development Policy Declaration 2.0," marking another core policy document for the digital asset industry, indicating a key transition of Hong Kong's digital asset policies from "framework construction" to "detailed implementation." From a tax perspective, this declaration continues Hong Kong's supportive attitude towards the digital asset industry, featuring two significant tax incentive measures: first, a stamp duty exemption on tokenized ETF, and second, an expanded scope for profits tax exemptions.

The stamp duty exemption for tokenized ETFs clearly states that all exchange-traded funds (ETFs) listed on the Hong Kong Stock Exchange will be exempt from stamp duty when transferred, with the government clarifying that such exemptions also apply to tokenized ETFs to promote the development of the tokenized market. The scope of profits tax exemptions has been further expanded to include specified digital assets for privately sold funds and family office investment control tools (FOIV) that can enjoy profits tax exemption qualifying transactions, thus specifically reducing the tax cost for institutional investors participating in digital asset transactions.

1.5 Evolution Logic and Trends

Looking back at this entire evolution process, we can see a clear regulatory path: from establishing basic principles to improving regulatory infrastructure, from domestic tax rules to cross-border information exchange, from standardizing regulation to providing tax incentives.

The key trends in the future present three main characteristics:

1. Standardization of regulatory systems (from fragmented guidelines to legislation + detailed closed loops), with a continuous strengthening of regulatory intensity and an increasingly完善 rules system;

2. Transparency of reporting requirements (mandatory third-party submissions + regulatory collaboration), with enhanced technological adaptability, as the Hong Kong Inland Revenue Department increasingly utilizes regulatory data to improve regulatory efficiency;

3. Globalization of regulatory scope (cross-border information exchange + implementation of OECD framework), with deepening international coordination and a gradual convergence of global digital asset tax standards.

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