Which is better (if salary is the same): Paid from US or paid from HK?

[Moodray]

Here's my dilemma:

• American citizen
• Employed by US company
• Will be living in Shenzhen, but travelling 75% of time throughout ME and Asia
• Will not be in HK > 60 per year
• Will not be in China > 180 per year
• Salary: 75K USD base + 75K commission

My company in the US can either pay me from there (deposit to HK bank account) or from our HK office. It's my choice.

Which would you ask for and why?

Also, if my company gives me 2500 USD per month for office expenses/living expenses, what's the best way to not have them be taxed?

Hopefully there are others that have faced similar circumstances...

Thanks!!

[PDLM]

It makes no difference from a HK Tax perspective since you will just be a visitor here and wouldn't be liable to any HK tax.

I'm not sure this is the best place to ask about China taxes - you probably need a China Expat forum for that. Will you be legally resident in China or an illegal immigrant?

[Rayzilla]

I just heard recently that China has changed their treatment of accounting for portion of tax on persons when in China. I haven't verified any if it is correct or not but from what I heard, it had something to do with counting my months as opposed to days. For example, if you worked a few days in China, it counts as a complete month. This is just what I heard yesterday so I would have to do some research to see if it is accurate or not because it is quite different from how most jurisdictions deal with this issue.

I highly recommend that your company arranges for one of the Big4 or one of the international accounting firms to provide you with advice on this.

[Rayzilla]

I couldn't find anything to confirm what I mentioned above. Everything still points to the 90/183 day rule.

Still, get advice from a tax professional because the implications could be significant.

[Football16]

I just got an invite to a free seminar from a very good global law firm where you could if you contact them find out more on this issue and if in HK get an invite to the session.

This is FREE ...

Barlow Lyde & Gilbert is ...hosting two Employment Seminars on Monday 28 March 2011 in Shanghai and Tuesday 29 March 2011 in Hong Kong.

Seminar Topic: Structuring International Secondments

Topic Outline: Robert Hill (BLG London), Pádraig Walsh (BLG Hong Kong) together with Matthew Durham (BLG Shanghai) will give a specialists view of typical problems that can arise from international secondment arrangements.

By viewing issues from an international perspective, we will address issues such as:
· What are the hallmarks of a secondment arrangement?
· Key points to consider when drafting documents for secondment structures.
· What laws will apply to a secondment?
· How do human resources managers deal with domestic law issues for secondees?
· How do immigration and taxation issues affect secondments?
· What is the risk of claims in the home and host country when secondments are terminated?
Agenda:
5.00pm - Registration
5.15pm - Seminar and Q&A (NB* the seminar will commence promptly at 5.15pm)
6.45pm - Cocktails and Canapés
Seminar Venues:
Hong Kong: 19/F Cheung Kong Center, 2 Queen’s Road Central, Hong Kong
Shanghai: Unit 2601-02 Azia Center, No. 1233 Lujiazui Ring Road, Shanghai
浦东陆家嘴环路1233号汇亚大厦2601室

[Moodray]

It makes no difference from a HK Tax perspective since you will just be a visitor here and wouldn't be liable to any HK tax.

I'm not sure this is the best place to ask about China taxes - you probably need a China Expat forum for that. Will you be legally resident in China or an illegal immigrant?

I have a Business Visa for one year multi-entry in China, so it will be a home base, but as I said, since I'm not going to be there much, I don't think China taxes will be an issue. I'll need to get some definitive answers regarding this "fuzzy" point...

If our HK office pays my salary, and I'm not in HK > 60 days in a year, will I still be tax-free?

[PDLM]

If our HK office pays my salary, and I'm not in HK > 60 days in a year, will I still be tax-free?

Yes - you only pay HK taxes if you undertake employment in Hong Kong. Where you are paid is irrelevant.

[Moodray]

Yes - you only pay HK taxes if you undertake employment in Hong Kong. Where you are paid is irrelevant.

I see; so in that case, it sounds as if it would be best to take payment from the HK office, since it is considered a separate autonomous company from my company in the USA. That way, I wouldn't have to worry about the Foreign Earned Income Exclusion issues.

[PDLM]

I'm no expert on this, but every country I know bases its taxes on where you earn them, not where the income is paid. Is the US different?