On November 4, Hong Kong’s Legislative Council formally passed a bill on crypto-asset reporting. Starting in 2027, crypto-asset service providers that meet the requirements will begin collecting and reporting users’ transaction records. Hong Kong’s Inland Revenue Department plans to exchange relevant information with partner tax jurisdictions for the first time in 2028.
After the news broke, many crypto users began to worry: Will we have to pay tax on crypto trading from now on? If I withdraw money from Binance to a Hong Kong bank account, will it be taxed?
The new rules do not introduce a tax on cryptocurrency trading. However, as crypto-asset transactions are gradually brought into the cross-border tax information exchange framework, users’ transaction records at some exchanges will be subject to stricter reporting requirements.
🌟 If you trade crypto in the future, which transactions will be reported?
Hong Kong is introducing the Crypto-Asset Reporting Framework (CARF), developed by the OECD.
According to the rules published by the Hong Kong Inland Revenue Department, the transactions covered fall into three categories:
1. Exchanges between fiat currency and crypto assets, such as using US dollars to buy BTC
2. Exchanges between crypto assets, such as swapping BTC for USDT
3. Certain crypto-asset transfers, including transfers to external wallets
Eligible service providers must collect information such as users’ names, tax-residency status, tax identification numbers, and the aggregate value, volume, and number of transactions involving different assets.
Even if users do not withdraw funds to a bank card, their relevant transaction records may still be reported to the tax authorities if they trade BTC or ETH on an exchange or transfer assets to an external wallet.
🌟 Who has to pay tax on crypto trading?
Hong Kong has introduced a transaction-information reporting regime; it has not introduced a new tax on cryptocurrency trading. Whether crypto-trading profits are taxable depends on the circumstances, which can be divided into three categories.
First category: mainland China tax residents.
Under mainland China’s Individual Income Tax Law, resident individuals are generally required to pay tax on taxable income earned both inside and outside the country. Income from the transfer of property is subject to a 20% tax rate. However, mainland China has not yet introduced uniform, detailed rules on taxing individuals’ gains from cryptocurrency transactions, so how these gains are taxed in practice remains uncertain.
Note that buying and selling cryptocurrency through an overseas exchange and then transferring the funds to a Hong Kong bank card does not automatically exempt you from tax obligations in mainland China.
Second category: individuals who make long-term investments in Hong Kong.
Hong Kong does not levy capital gains tax. If you buy assets such as BTC or ETH for long-term investment and the proceeds from a later sale are considered capital in nature, they are generally not subject to Hong Kong profits tax.
Even occasional trading does not necessarily mean you have to pay tax; the key question is whether the investment activity amounts to carrying on a business.
Third category: individuals or entities conducting business-related trading in Hong Kong.
If activities such as high-frequency trading or quantitative market-making amount to carrying on a business in Hong Kong and generate Hong Kong-sourced profits, they may be subject to profits tax.
If the two-tiered tax rates apply, the tax rate on the first HK$2 million of assessable profits is 7.5% for a sole proprietorship or partnership and 8.25% for a company. The rates on the excess are 15% and 16.5%, respectively.
🌟 Do you have to pay tax when withdrawing from Binance to a Hong Kong bank card?
This is the question ordinary users care about most.
Withdrawing from Binance to a Hong Kong bank card generally does not trigger additional tax simply because the funds have arrived.
For example, suppose you sell 100,000 USDT on Binance and transfer the funds to your Hong Kong bank card through a fiat currency channel. Hong Kong does not tax you directly on the amount deposited. Whether you owe tax depends on the source of the funds, your trading gains, and your tax-residency status.
Users who live in mainland China long term may still be considered mainland China tax residents even if they hold a Hong Kong bank card, and may need to handle crypto-asset gains in accordance with relevant mainland China tax rules. Exactly how these gains are taxed remains unclear.
In addition, Hong Kong banks conduct fairly strict reviews of funds related to crypto assets. Users may be asked to provide transaction records, proof of the source of funds, and other documents, and some banks may even refuse to accept the funds. This is part of anti-money laundering and banking compliance checks, which is separate from tax collection.
🌟 In closing
At present, Hong Kong’s CARF mainly covers crypto-asset service providers that meet the relevant Hong Kong nexus requirements; it does not cover all exchanges worldwide. Whether overseas platforms such as Binance, OKX, and Bybit are required to report depends on the entities that actually operate them and the rules that apply.
For platforms outside the scope of Hong Kong’s CARF reporting requirements, users’ existing tax rules have not changed as a result of this amendment to Hong Kong law. Hong Kong plans to exchange crypto-transaction information with partner jurisdictions starting in 2028, but mainland China has not yet announced a specific timeline for its first automatic CARF exchange.
For ordinary users, trading and withdrawing funds are unlikely to change significantly in the short term as a result of this amendment to Hong Kong law.