If you are engaged in “non-Hong Kong employment”, do you need to pay tax? In Hong Kong, an international metropolis, there are often talents going back and forth between overseas and Hong Kong. How does Hong Kong’s tax system tax these people? This article will introduce this issue and how they can apply for income exemption from salaries tax.
Do people employed in Hong Kong have to pay tax?
Hong Kong’s tax system is based on “territorial source”, in other words, no matter where you are, if you have income from any position, employment, or pension that is “originated in Hong Kong”, you will be subject to salaries tax. How to understand the above definition of “originating from Hong Kong”? The Inland Revenue Department will consider the source of employment based on the following 3 factors:
• where employment contracts are negotiated, concluded and enforced;
• the employer’s residence; and
• Where employees are paid.
If the above three factors all occur in Hong Kong, then it is obvious that this income is “generated from Hong Kong”, otherwise, the Inland Revenue Department will reserve the right to consider whether it needs to be taxed based on other possible factors.
If you are engaged in “non-Hong Kong employment”?
If you are assigned to perform official duties in another country and your source of employment is outside Hong Kong, the Inland Revenue Department will only assess your income from services provided in Hong Kong.
That is to say, the tax base calculates the amount of salaries tax payable (including “vacation pay” received) based on the number of days you have stayed in Hong Kong in the year of assessment, and is calculated according to the following formula:
Holiday days in Hong Kong = total holiday days X (working days in Hong Kong / working days in a year)
*Whereas (days worked + days worked outside the country + total vacation days) should be 365 or 366 days.
Taking an employee of “non-Hong Kong employment” as an example, the apportionment is based on the time of his stay in Hong Kong (the day of departure and arrival in Hong Kong combined), if his annual salary is $365,000 and he stays in Hong Kong for 100 days , its assessable income is $365,000 × 100/365 = $100,000.
Application for Income Exemption from Salaries Tax
If the taxpayer has been performing official duties overseas for a long period of time, you can apply to the Inland Revenue Department for all/part of your income for each employment in the tax return for individuals (BIR60) and its appendices for each tax year for the following reasons Exempt from paying salaries tax, or claim a tax credit:
• for the year of assessment, all duties were performed outside Hong Kong;
• Employed outside Hong Kong, whose work is supervised and supervised outside Hong Kong, and the return to Hong Kong is only for a visit and does not exceed 60 days;
• Performing duties outside Hong Kong and paying tax on income similar in nature to Hong Kong salaries tax (this relief does not apply to places with double taxation agreements with Hong Kong);
• If the taxpayer is a Hong Kong resident and provides services in a region that has entered into a double taxation arrangement with Hong Kong, you can claim a tax credit for the regional tax on your income.
Can I apply for an exemption for attending training and attending conferences?
Under Section 8(1A)(b)(ii) of the Inland Revenue Ordinance, any person who is “employee in Hong Kong” or “employee in Hong Kong” may be arrested for attending training, attending meetings or reporting work progress in Hong Kong, etc. deemed to be providing services in Hong Kong.
However, if the taxpayer temporarily or temporarily “visits Hong Kong” for a total of not more than 60 days (calculated as “the number of days in the local area”, any less than one day is also counted as one day) during the period of service, the income from the employment will still be Full tax exemption.
As for whether it is “visiting”, the Inland Revenue Department will depend on its individual circumstances. Generally, if the taxpayer has been stationed abroad for a long time, the occasional return to Hong Kong will only be regarded as a visitation.
How are jobs in the aviation industry calculated?
Section 8(2)(j) of the Inland Revenue Ordinance applies to ship personnel and aircraft crew (including captains and pilots) to apply for income tax exemption. If their stay in Hong Kong during the basis period of assessment does not exceed
After 60 days, and 120 days in two consecutive years of assessment, they can apply for an exemption from salaries tax, and the “transit day” (arrival in Hong Kong, the days of staying before customs clearance) will be regarded as the number of days in Hong Kong calculate.
The above information is for reference only. If you have any questions about tax declaration and accounting, we welcome your inquiries.