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Tax liability if I am remote working in HK

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  1. #1

    Lightbulb Tax liability if I am remote working in HK

    I am a HK resident and am directly employed by a foreign company (signed my contract online) that has no local HK entity as a software developer. The company conducts no business in HK and has no customers here.

    My salary is directly wired by the company to my HK bank account every month.

    Since HK tax is territorial and the income is not sourced from HK am I still liable to pay tax in HK?

    I'll appreciate your kind advice.


  2. #2

    Join Date
    May 2021

    Not a tax advisor here but you're liable for tax since you've earned it in HK. I don't think however the IRD will go after you if you showed some, if not all income since the overseas employer isn't tracked by the IRD. Your employer will need to show CPF contribution to the IRD after the 11th or 13th month (check this fact out) when IRD will know how much you make.

  3. #3

    Everyone's tax situation differs, so take that into account, but generally speaking if you live in HK you will be tax resident in HK and yes should therefore be paying tax on your employment income regardless of where your employer is domiciled.

  4. #4

    Join Date
    Sep 2018

    Not 100% the same situation but here is what I found when looking into my company's tax situation. I imagine a similar test is used for personal tax

    The broad guiding principle is that one looks to see what the taxpayer has done to earn the profits in question and where he has done it. In other words, the proper approach is to identify the operations which produced the relevant profits and ascertain where those operations took place. The source of profits must be attributed to the operations of the taxpayer which produce them and not to the operations of other members of the taxpayer's group.
    My interpretation is this is IRD saying "nice try" but I don't claim to be a tax advisor
    Last edited by aw451; 26-03-2022 at 08:52 AM.

  5. #5

    As per my understanding, there are only two options to be exempted from salaries tax considering that you generally fulfill the territorial test as you perform the work for which you are paid in Hong Kong.
    The so called 60 day claim is not applicable in your case as you are more than 60 days in Hong Kong. Then the only option for you would be the the "no services rendered claim", which basically requires that all your services are rendered outside Hong Kong. However, as this is not the case even considering a very broad interpretation in your case, my conclusion is that your slary is fully taxable in Hong Kong. Only for any days where you would be physically working outside Hong Kong, there could be a pro-rata exemtion.

  6. #6

    Join Date
    Jan 2021

    Hi - nice to hear of people getting hired directly online and it didn't sound like the company was doing it for corp tax reasons - just simply hiring someone they needed who happened to be living in HK.

    chhabsta - If you haven't already sent off a notice of chargeability to the IRD, you should know that once you do that, your employer will come under the IRD's radar (what NedMan said). The Q you need to ask yourself is would they have hired you if they knew they had to liaise with + give corp info the local tax authority /get an opinion on their overall corp tax exposure to HK. If they have no other connection to HK, they might find this too troublesome and just opt to hire someone else when your contract ends OR they could be okay with it if they have a tax advisor already / big company - don't know, something for you to assess.

    If you're worried about running foul of tax laws by not paying taxes, then consider paying taxes as a self-employed person (SEP) - unfortunately it involves additional admin for you individually e.g. you need to register as a sole proprietor business, enrol in MPF as a SEP and contribute. In short, admin you'll have to do for yourself to be able to sleep at night as a tax-law abiding citizen vs becoming an unattractive job applicant/risk getting your contract renewed. Since you can work remotely, it might not be a bad idea doing it this way since this will help with any other future employer you sign with the same way. The fact that you're somebody else's employee under an employment contract is not an issue. You just view yourself as a freelancer, independent contractor this category of work you provide remotely and your tax position for such income is in the role of a SEP.

    You can also just leave it as-is until you get a notice of chargeability from the IRD. I'm always surprised when I see individuals worrying about salaries tax they should be paying when they haven't been contacted by the IRD at all. This must be what people call a responsible adult ...

    Sage likes this.

  7. #7

    Join Date
    Nov 2005
    Cramped island

    a second order question floating out, would the hiring company be obligated to submit the OP's income info to their country of domicile (and hence country of contract) and make OP pays tax at the company domicile country ?

  8. #8

    Easier to register as self employed, as you may get other gigs too....

  9. #9

    Join Date
    Mar 2021

    If you are resident in a country and enjoying the public/social benefits of that country, I'm not sure why you would even think that you wouldn't be liable to contribute via taxation, regardless of where that income is coming from.

  10. #10

    Join Date
    Sep 2011

    You owe tax in HK. Income arising.

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