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Taxes for the first year in HK

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  1. #1
    panevino83

    Taxes for the first year in HK

    Hello all,

    I've been in HK for less then 6 months.

    Is it true that for the first year there's no need to pay taxes?

    What if my company fires me before the first year and I would need to leave the country?

    Thanks for the support


  2. #2

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    Of course you need to pay your taxes.

    The tax year runs April through end of March the following year. If in the year you earned less than 120k then you're likely to fall under the deduction amount and owe no taxes, and it's the deduction amount is even higher with a spouse and/or children.

    If you leave HK, you should settle your tax bill. You never know when you will come back and it is your responsibility. Many people come to this forum asking how to correct mistakes in their past because of being greedy, so try to avoid falling into that mindset that I'm leaving and not coming back so it doesn't matter. The bill might come quite late, so technically, during the first year, you don't pay any taxes, but you will pay for it when the bill comes, which could be during your 2nd year. The bill will include your 1st year taxes plus provisional for 2nd year, which essentially means you pay 2 years taxes in your first bill.

    Last edited by MandM!; 24-10-2015 at 05:40 PM.

  3. #3

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    If you are leaving, I think you could write a letter to IRD to waive the provisional for the second year so you are just paying what you owe for the first year.


  4. #4

    Join Date
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    If you are on working visa and are leaving the company, the company normally will hold the last month salary and ask you clear taxes before paying..without the tax release letter i dont think you can complete the release letter


  5. #5

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    Definitely not true, I've never had a company withhold. In fact, it is illegal if they do not pay your final payment within 7 days of leaving. The company does however have a responsibility if the employee does not pay the taxes and/or leave HK by the time the visa expires.

    You should be given a release letter on your last day. And companies do this to prevent further litigation, to sign off that the final payment is in fact the final payment the employee will receive from the employer. (You can not dispute unpaid wages/commissions thereafter signing this letter).


  6. #6

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    MandM! I think the Inland Revenue Ordinance provides for witholding of salaries, see below and in particular "At the same time, the employer must also temporarily withhold payments of salaries and all other moneys to that employee until the IRD issues a letter of release. Failure to comply with such requirements by the individual or the employer may result in penal actions."

    One of my former employers (a large investment bank) has withheld my salaries in the past when I moved to Singapore.

    http://www.ird.gov.hk/eng/pdf/pam46e.pdf

    Last edited by jrkob; 24-10-2015 at 07:29 PM.

  7. #7

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    Jr, did you leave the company or were you relocated?

    Do you know the procedure and timeline to receive this clearance letter? I would have thought this is for employees who owe back taxes and IRD has notified the employer of such, and as a result of employment termination, the employer withholds taxes.

    How does an employer know that an employee is leaving? Must the employer ask the employee, or must the employee give some indication of such. What is the bar set here?

    I guess I have never left Hong Kong, so I have not experienced this for that reason perhaps.


  8. #8

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    MandM!, in my case during my exit interview, the HR lady asked me if I was taking my new job in HK or overseas. I responded overseas at which point she informed me she would withhold my last month of salary, due a few days later. In terms of timeline, I cannot recall clearly, that was in 2005 and I'm old, my memory not too good . I remember my last salary wasn't enough to pay my taxes in full so I had to top up. I was aware that my employer would be liable to pay my taxes if I was running away without paying them so that they withhold did not bother me.

    I think you're right, if you have not left HK before then I think the document I posted earlier should not apply to you as its title suggests it's for people leaving HK.

    There was a thread a few weeks ago where this was discussed in very much details, let me try to find it for you.

    MandM! likes this.

  9. #9

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    Quote Originally Posted by MandM!
    Definitely not true, I've never had a company withhold. In fact, it is illegal if they do not pay your final payment within 7 days of leaving. The company does however have a responsibility if the employee does not pay the taxes and/or leave HK by the time the visa expires.

    You should be given a release letter on your last day. And companies do this to prevent further litigation, to sign off that the final payment is in fact the final payment the employee will receive from the employer. (You can not dispute unpaid wages/commissions thereafter signing this letter).
    You are wrong. Companies are obliged to withhold the final salary until they get clearance from the tax authority that tax has been paid.

  10. #10

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    Katherine, in what case does this apply? Only when an employee "claims" or notifies the employer that they are leaving HK?

    Quote Originally Posted by HK_Katherine
    You are wrong. Companies are obliged to withhold the final salary until they get clearance from the tax authority that tax has been paid.

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