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Blockchain and Crypto Services

Our services help you start and manage blockchain/crypto businesses

Blockchain technology has changed how the business operates in many ways such as payment for goods and services in cryptocurrencies, such as bitcoin and stablecoins.  Cryptocurrencies and digital tokens also challenge traditional financial reporting standards and taxation regimes. 


FastLane Group believes accountants and corporate service providers play important roles in understanding and supporting the new technology that has a paramount impact on the traditional business models and financial reporting.

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Blockchain technology has changed how the business operates in many ways such as payment for goods and services in cryptocurrencies, such as bitcoin and stablecoins.  Cryptocurrencies and digital tokens also challenge traditional financial reporting standards and taxation regimes. 


FastLane Group believes accountants and corporate service providers play important roles in understanding and supporting the new technology that has a paramount impact on the traditional business models and financial reporting.

Maybe The Easiest Way to Manage Your Crypto Business

Our blockchain/crypto services include:

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Corporate and Entity Structuring

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Legal Entities Establishment and Maintenance

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Crypto Fund Formation and Consultation

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Payroll/Benefits Administration and Employment Permits

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PEO/Remote Hiring Services

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Tax and Accounting Consultations

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Governance and Controls including KYC/AML support

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Auditing financial statements with Crypto holding

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Capital Raising VC series financing/Term Sheets

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1. How do Hong Kong accounting standards classify and treat cryptocurrency?

In the process of developing and applying an accounting policy for cryptocurrency, it is noted that there is no Hong Kong Financial Reporting Standard that specifically applies to the accounting treatment for cryptocurrency. The International Financial Reporting Standards Interpretations Committee and with reference to Hong Kong Accounting Standard 38 “Intangible Assets” (“HKAS 38”), which defines an intangible asset as an identifiable non-monetary asset without physical substance, the directors considered that the cryptocurrency satisfies the elements of the definition of an intangible asset.

Since the cryptocurrency is considered as a type of intangible asset and measures cryptocurrency held by the company at revaluation less impairment.  An impairment assessment is carried out at the end of the reporting period to determine whether the recoverable amount of the cryptocurrency is higher than its carrying amount.  An impairment loss is recognised as an expense immediately when the recoverable amount is below the carrying amount.

Any revaluation increase arising on the revaluation of such cryptocurrency is recognised in other comprehensive income and accumulated in revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously expensed.  A decrease in the carrying amount arising from the revaluation of such cryptocurrency is recognised in profit or loss to the extent that it exceeds the balance.  If any, helf in the revaluation reserve relating to a previous revaluation of that asset.  On a subsequent disposal of a revalued asset, the attributable revaluation surplus is transferred to retained earnings.

2. What is the taxation for cryptocurrency and blockchain in Hong Kong?

The Hong Kong tax system is territorial in nature, where only profits arising or are derived in Hong Kong are liable to Hong Kong profits tax. It is characterised by key features such as not having a GST/VAT regime and no capital gains tax, and generally does not tax dividend income or apply withholding tax on dividends and interest. While no specific laws are in place on the taxation of cryptocurrencies, the Hong Kong Inland Revenue Department (“IRD”) issued Departmental Interpretation and Practice Notes (“DIPN”) 39 in March 2020, which provides guidance on the digital economy, electronic commerce and digital assets: 

DIPNs do not have legally binding force on taxpayers, however, does provide an indication of the position likely to be taken by the IRD. Some clarifications provided by DIPN 39 in respect to the taxation of digital assets are:

1) Profits tax treatment of digital assets depends on their categorization (payment token, security token or utility token).

2) The proceeds of an Initial Coin Offering are taxed by following the attributes of the token that is issued. If securities tokens are issued, proceeds would generally be considered to be capital in nature. If utility tokens are issued, proceeds would generally be taxable if found to be sourced in Hong Kong.

3) Digital assets held for long-term investment purposes may be considered capital in nature, in which case their disposal would result in capital gains (which are not taxable in Hong Kong). Whether digital assets are held for investment purposes or as trading stock depends on the intention at the time of acquisition.

4) Cryptocurrency received as employment income should be reported at their market value and subject to the same salaries tax treatment as regular remuneration. DIPN 39 signifies that the IRD is likely to be looking at the crypto space more closely in the near future.

3. What are the general developments in cryptocurrency and blockchain tax guidance in major jurisdictions?

There is an increased level of regulatory attention on preventing money laundering, tightening on AML and CFT rules as well as new regulatory licensing frameworks on virtual asset exchanges at the same time, OECD released a report with an overview of tax treatments and emerging tax policy issues with the aim to provide clear, updated guidance and legislative frameworks for the tax treatment of crypto-assets and virtual currencies and also tax guidance in response to emerging technological developments, including stablecoins, Central Bank Digital Currencies, Proof-of-Stake and decentralised finance, for which existing frameworks may not be appropriate.

4. What are the common cryptocurrency issues and events to determine tax classifications and treatments?

These are complicated and the list is ever growing due to the pace and scale of the development in the crypto space.  Each issue and event will have to be examined carefully and then follow the local tax law but often there is a lack of tax guidance given. 

  • Application of CRS rules to virtual asset service providers (e.g crypto exchange/wallet providers)
  • Non-fungible tokens
  • Crypto borrowing and lending and decentralised finance (“DeFi”)
  • ICOs and token issuance -security tokens
  • ICOs and token issuance – utility tokens
  • ICOs and token issuance – payment tokens
  • Direct taxation of staking Income
  • Direct taxation of mining income
  • Application of local financial transactions taxes or stamp duties to crypto-assets
  • VAT/GST/Sales tax on staking income
  • VAT/GST/Sales tax on mining – transaction validation fees
  • VAT/GST/Sales tax on mining income – eg. mining new blocks, under proof work
  • VAT/GST/Sales tax re trading security tokens
  • VAT/GST/Sales tax re trading utility tokens
  • VAT/GST/Sales tax re trading payment tokens
  • Taxation of airdrops
  • Taxation of hard forks
  • Calculation of gains/losses on buy/sell of crypto-assets for businesses
  • Calculation of capital gains on buy/sell of crypto-assets for individuals

5. What are the tax implications for companies when dealing with cryptocurrencies in Hong Kong?

There is no guidance on how crypto should be taxed in the Inland Revenue Ordinance (IRO).  The issuance of the DIPN 39 provides some general principles on digital assets but might not necessarily address the evolving digital asset economy and lead to over-simplifying the taxpayer’s tax positions and therefore open up for future challenges from the IRD.

The IRD will determine the taxation of digital assets based on the type of digital assets and how the assets are used in the taxpayer’s business.  There are three categories of crypto assets; 1) Payment token, 2) Security token 3) Utility token. 

If the tokens represent a security token offering such as equity or ownership interests in the company, proceeds received from the issuance will be treated as capital in nature and non-taxable. If on the other hand the tokens only give the holders the right to goods or services without any equity or ownership interests (utility tokens), the issuance proceeds will be treated as a prepayment for goods or services, and the timing of the revenue recognition should generally follow how the token proceeds are reflected in the P&L in accordance with applicable generally accepted accounting principles.

If a business is considered to be carried on, say by trading, exchanging or mining assets, it will only be Hong Kong-sourced profits that are subject to profits tax.  Again, this is a question of fact and will require an analysis of where the profit-generating activities have been undertaken.  Events such as airdrops and blockchain forks are to be treated as Hong Kong sourced profits in the course of a cryptocurrency business for such taxpayers. 

For taxpayers using crypto as consideration for ordinary business transactions, for example, receipt of crypto to purchase goods or services, the market value of the crypto at the date of transaction should reflect the number of sales and purchases.

6. Is there salaries tax for employees receiving crypto as remuneration in Hong Kong?

Yes, the employee will be taxed under the salaries tax provision when remunerated in crypto. The amount to be reported in the employee’s return should be the market value of the crypto at the time of accrual and not the amount when realising the crypto into fiat.   If the crypto is granted to employees as part of the salary package, the crypto will be taxed upfront for the granted value and the future appreciation in the value of the crypto upon selling shall generally be tax-free.  Both employers and employees have reporting obligations when cryptocurrency is received as employment income.

7. What is the tax implication for investing in cryptocurrencies in Hong Kong?

For investors who hold digital assets for long-term investment purposes, the proceeds will not be taxable.  Any profits from disposing of the crypto assets would be capital in nature and not be chargeable to profits tax.  There is no capital gains tax in Hong Kong.  Determining whether the crypto assets should be regarded as capital assets or trading stock of a business is a question of facts and circumstances such as the frequency of activity, hiring of personnel and the purpose of the activity.

8. What are the common jurisdictions to set up a company that allows working on blockchain and cryptocurrencies related activities?

When talking about how to start a blockchain company, utilising an offshore company for cryptocurrencies, especially in crypto-friendly jurisdictions, has become an attractive option. There is no regulatory framework that prohibits cryptocurrency or blockchain business in both the British Virgin Islands (BVI) and Cayman Islands so currently, you can incorporate your company to run the business.  However, one has to always stay on top of the regulatory changes and landscape.

9. Does Hong Kong allow companies to handle cryptocurrency transactions?

Yes, it is not illegal to hold cryptocurrency transactions in a Hong Kong company but one must observe that the company does not conduct cryptocurrency business without a proper license and following the regulatory guidance.

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