Tax Background Check

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  1. #1

    Join Date
    Jan 2010
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    6,452

    Tax Background Check

    I've got a friend, who is HK permanent resident, who has a consulting business on the mainland and HK since a couple of years. Now he likes to purchase an apartment in HK for an substantial sum. The property agent has told him now that the HK government is going to double check his financial and tax records for taxation purposes.

    Is there any way to legally avoid that background check? Maybe purchasing the property through a BVI company or similar?


  2. #2

    Join Date
    Dec 2002
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    >> The property agent has told him now that the HK government is going to
    >> double check his financial and tax records for taxation purposes.

    Not heard of property purchases triggering tax audits.


  3. #3

    Join Date
    Mar 2010
    Posts
    238

    The IRD will not be conducting the check BEFORE he buys the property - they have always maintained a database of property transactions and will check the buyer/sellor if they suspect (1) property trading or (2) sources of income that have not been taxed...this is nothing new despite the recent news articles.

    If your friend has been conducting business in HK but has never reported taxes, then he would be a target (and rightly so).

    A BVI could assist to hide the identity of the buyer but he would need to consider his financing. If he needs a mortgage, then the bank will need some personal guarantees and the IRD can obtain such information from the banks (if they are determined).