Tax for Training Visa

[mad-d0g]

Hi guys, I will be coming to Hong Kong this Nov for an internship and I will be holding a training visa. The company is paying me HKD25 000. I will hv to fork out got my own rent possibly around 5k to 10k. How much will the income tax be? Thanks in advance.

[KnowItAll]

http://www.ird.gov.hk has a tax calculator.

[mad-d0g]

yea...i tried that. but i believe it's for locals? i understand that if the income is lower than HKD25 000, one will be exempted from income tax. But I'm a foreigner who will be there for an internship. Will I need to pay tax?

[PDLM]

Er, no. Salaries tax is the same for everyone. If you are employed in Hong Kong and earn enough then you pay tax. Use the tax calculator and that will tell you what you will need to pay.

[mad-d0g]

You mean there they don't tax u more even if you're a foreign employee in HK? Well, in that case I don't think I will be subjected to income tax because what I get is HKD25,000 nett with no extra allowances. Many thanks!

[PDLM]

How many months are you here for? The tax-free allowance (for any single person) is HK$100,000 in each tax year (April-March). So if you are here for more than 4 months then you will be liable for some tax.

[mad-d0g]

well i will be here for a one year internship beginning 1st Nov 2007. i'm sorry i'm not well versed in tax matters. what do you mean by "HKD100,000 in each tax year"? btw, they tax interns as well?

[PDLM]

For the Nth time! EVERYONE who has a salary in Hong Kong is subject to tax if they earn more than the tax free allowance. In pretty much every country tax is calculated based on your income in a 12 month period (a tax year). In some countries the tax year is the same as the calendar year (January to December) but in others it starts at a different point. In Hong Kong the tax year is April to March, so your tax is assessed on your income in the 12 month period between 1 April one year and 31 March the next.

In the tax year 2007-2008 you will be here for 5 months (Nov 2007 to Mar 2008) so your earnings will be $125,000. The tax due on that is HK$500.

In the tax year 2008-2009 you will earn 7*25k = HK$175,000. Assuming no change in the tax rates or allowances then you will be liable for tax of HK$3750.

So in total you will have to pay HK$4250. (You get lucky because you work year is split over two tax years - if you started on 1st April you would have to pay HK$23,500 in tax.)

[mad-d0g]

sorry if my questions annoyed you. you calculate using this formula?

Full income (Y/A 2006/07) x 123 days / (365 days - leave days)

i think the tax looks pretty high to me. i read that if the minimum taxable salary is more than HKD35,000 at 2% if I'm not mistaken. so if I make less than that, how do they calculate?

[neha]

if u are making 125000 in this financial year . Govt allows u 100000 off as an individual person and u are charged tax only on 25000.00 which comes to hkd500.00 Also if your employee will MPF for u then it will be less and u will pay hkd 400.00. I dont know from where u got that formula.

are u making less hkd 35000 a year ?