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Clearing taxes after resignation?

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  1. #1

    Clearing taxes after resignation?

    Hi, I’ve recently resigned from my job and plan to take a short break before looking for my next role... my working visa is valid till 2024. My company says they’re cancelling sponsorship (normal, according to what I’ve read?).. and they’re going to submit the IR56F form for me. This is for tax purposes. However, they want me to pay the taxes that I owe for my whole salary with them, rather than waiting for the tax season later this year. They say they’ll withhold my salary till I clear the taxes. Is this common practice?


  2. #2

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    Your company should be asking if you intend to leave Hong Kong - if your reply is 'no' then they should submit form 56E, which does not require them to hold your final salary until you have cleared your taxes. Simply being on an employment visa is not sufficient reason for them to submit IR56F.

    shri likes this.

  3. #3

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    That shouldn't happen if they filled out IR56F which means you told them you are planning to stay in HK. Are you sure they filed IR56F and not G?


  4. #4

    Yes, they’re filing F, as I told them I intend to stay. However they want to clear taxes or at least get a “release letter” from IRD. They just want a clean break, I think. They seem clueless.

    Also, they even told me that I’ll have to leave HK as my visa would no longer be valid. But that’s not true, based on various other expats that I’ve spoken to. Any input?


  5. #5

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    I can only advise pointing them to this page https://www.ird.gov.hk/eng/tax/ere_obl.htm#a032

    Regarding your second point, they tell immigration that they are cancelling your sponsorship but you are free to live here until the expiration of your visa. You can't work or start a business.


  6. #6

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    Actually, your company is not clueless, they seem to have comprehensive procedures that fully comply with tax office.
    Looking back to my former company who passed an audit from IRD, your company would file BOTH forms:
    IR56F (On termination of his service (or death))
    IR56G (On his leaving Hong Kong for good or for a substantial period of time)

    They will file IR56G to cover their tax liabilities for any employees holding a work visa.

    My previous company did hold my last salary until I have gone to the tax office and obtained:
    Letter of Release[IR607]

    Below is the webpage for the HK Tax office, it gives you the exact instructions on what the taxpayer , which is you (the employee) needs to do. Basically, yes, you need to pay up.

    https://www.ird.gov.hk/eng/tax/ind_twl.htm
    Taxpayer who is about to leave Hong Kong

    https://www.ird.gov.hk/eng/pdf/ir6158e.pdf
    Tax Clearance - Things to be done / noted by Employer and Employee (IR6158)

    https://www.ird.gov.hk/eng/pdf/pam46e.pdf
    You or your employee is going to leave Hong Kong - What are you required to do under the tax law ?


  7. #7

    Hi, Thanks for the detailed reply. But I’m not leaving HK.... doesn’t that make a difference?


  8. #8

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    I have never heard of a company filing IR56G "just in case" the former employee leaves Hong Kong. The employer has no obligation beyond asking the employee "do you plan to leave Hong Kong?" And then filing the appropriate form and withholding funds if they answered positively.

    shri and kimwy66 like this.

  9. #9

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    You should let them know that you're not leaving HK, and they have to fill IR56F. In this case there is no reason to withhold your salary and force paying tax earlier. You can send them polite letter explaining that if they fill instead IR56G, they will need to put your intended date for departing from HK, and since you don't have one, it would be willingful misrepresentation from their side. Worked for me to convince ex employer who also was doing "just in case" excuses for that.
    If you're departing for good, it's IR56G form and what they're doing is standard practice.

    Last edited by GotIt; 18-02-2021 at 10:36 AM.

  10. #10

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    Yeah when I left HK, its 56G, company withheld last salary, I had to go to tax office and pay taxes to tax office and get a release letter from them, show release letter to company, company then pays final month salary.

    But for most 'normal' and local job leavers that are simply ending employment and not leaving HK, its 56F. I don't have personal experience with this, but there should be no withholding of salary or paying taxes upfront in this situation. You just pay taxes as you normally would at the end of the financial year.

    For what its worth, if you employer are being dicks and witholding salary until you get a release letter, of course you can fight with then and tell them how stupid they are. Or the other option if you just want to play nice, the tax office are quite streamlined in this process so paying the taxes and getting the release letter is not a huge burden. Just rock up to the tax office and do an on the spot tax return and all fairly quick and done at once. Just bring cash with you to pay taxes as they didnt accept electronic payments from my memory.

    LifeInHK likes this.

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