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  • 3 Post By mesmerizer
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  • 3 Post By CatcherBiz

Never lived in HK but received collection reforcement

  1. #1

    Join Date
    Jan 2020

    Never lived in HK but received collection reforcement

    Hi everyone,

    This has been bothering both my partner and myself.

    Basically, my partner was employed by a HK company back to 2013. The contract and all of his work were signed and conducted in the UK. The question is why we still received the letter regarding the income tax. He did not try to breach any law, he consulted HMRC and was told he should pay the tax to UK, in which he did.

    We of course had our research done, but probably did not cover this situation much. As far as we know, the matter of tax paying only takes place when a worker actually lives or conducts his work in HK.

    Could someone shed any light for us please? much appreciated.

  2. #2

    Join Date
    Dec 2002

    Did he travel to HK frequently for work?

  3. #3

    Join Date
    Jul 2015

    Well, good news is it’s straightforward matter. Any competent tax advisor can straighten the issues out for you (assuming he didn’t travel to Hk for his duties).

  4. #4

    Join Date
    Jul 2018

    DO NOT travel to Hong Kong

    First and foremost, please do not allow your partner to travel to Hong Kong. He would be prevented from leaving HK by HK Immigration.

    It seems as though the company who employed him in Hong Kong has reported his salary to the iRD in Hong Kong. That's the only way the iRD would know about it. The company may well be obliged to report his salary to the iRD, I don't know. Your partner's salary would probably be considered as income earned in Hong Kong, unless the company he worked for had a UK office. Any income earned in a country is taxable in that country. Naturally the HMRC would tell your partner that he needed to pay tax in the UK, since that is where he is living and he would be considered to be a resident of the UK for taxation purposes.

    So, the bad news is what is known as "double taxation". Which means that tax is payable on income in his home country as well as where the income is earned. Now, there used to be an arrangement between various countries which recognised tax paid in one country as absolving the employee from paying tax in the other country, however I am not sure whether HK (SAR) China and the UK have such an arrangement and only a tax professional / lawyer would be able to know for sure.

    It may be that if he can provide evidence that tax has already been paid in the UK on the income he earned from the HK company, that the iRD in HK will waive any taxation obligation to HK. However, I must reiterate, he must not travel to HK to sort this out (or for any other reason) or else he will be denied exit (until it is resolved to the satisfaction of the iRD).

    shri, Coolboy and traineeinvestor like this.

  5. #5

    Join Date
    Oct 2010

    Some guidance from KPMG on the matter. On my reading, if he spent less than 60 days per year working in Hong Kong, looks like he should not be assessed for Salaries Tax

    There are a number of exemptions from salaries tax available to employees. In general, if all services with respect to the employment are rendered outside Hong Kong (SAR), regardless of the status of the employment (see earlier), the income will be fully exempt from tax. In addition, if duties are rendered in Hong Kong (SAR) during visits of 60 days or less in a fiscal year, no liability will arise.
    I would call up HK Inland Revenue and speak to them to sort this out. They'll be able to answer more definitively than anyone else.
    Thera likes this.

  6. #6

    Join Date
    Jul 2019
    Kwai Chung

    Never lived (Stayed) in HK

    Hi Joshua,

    Although you and your partner never "lived" in Hong Kong, would there by any case that you or partner has stayed in Hong Kong which caught the attention of the IRD (Tax Department in Hong Kong)??

    Below I have highlighted the perspective of the IRD for your easy reference:-

    (B) All Services Were Rendered Outside Hong Kong During the Year (i.e. under section 8(1A)(b)(ii) of the IRO)

    This exemption is generally available to employees irrespective of the locality of their employment. Attending trainings, meetings, or reporting in Hong Kong is regarded as services rendered in Hong Kong for the purpose of the exemption. You are exempt from salaries tax for a year of assessment only if you rendered all services outside Hong Kong in that year of assessment, unless you are a civil servant or a crew member of a ship or an aircraft. Income from services rendered in Hong Kong during visits not exceeding a total of 60 days in the year is also excluded from tax.

    Because you have already received the letter from IRD, a formal response is required by providing relevant supports to justify that your partner is qualify to the above exemption requirement, that means, by providing a copy of every pages of the passport to show that the location of stay during the tax assessment year(s), therefore, eligible to apply for full exemption.

    Hope this information suit you well

    shri, Thera and traineeinvestor like this.