Tax information: Leaving Hong Kong
Welcome to the tax guide on leaving Hong Kong, produced by Deloitte. Looking for tax information about going to Hong Kong, Click here
This document has been prepared based on the legislation and practices of the country concerned as at 01 April 2009. Tax legislation and administrative practices may change, and this document is a summary of potential issues to consider. This document should not be used as a substitute for professional tax and immigration advice which should be sought for the country of arrival and departure in advance of moving in order to discuss your specific circumstances.
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Before/once you departQ. Should I complete any documentation prior to leaving Hong Kong?
A. Where an employee is leaving Hong Kong permanently, the employer must file Form IR56G (Notification of Departure from Hong Kong) one month before departure, and the employer should withhold all payments to or on behalf of the employee for a period of one month from the date on which the employer gives notice to the Inland Revenue Department (IRD) or until the IRD notifies the employer that it is permissible to do so.
The individuals final Hong Kong tax return should also be filed, and the tax liability paid, prior to departure at which point a letter of release will be issued by the IRD and any monies withheld can then be paid.
For outbound employees from Hong Kong who continue to hold Hong Kong employment, both the employer and employee will have ongoing tax filing obligations throughout the outbound assignment. No tax clearance is required prior to departure from Hong Kong to commence the outbound assignment.
Q.
Is it beneficial to open an offshore bank account compared to retaining an account in Hong Kong ?
A.Offshore accounts do not provide tax benefits for Hong Kong purposes; however, it may be advisable to open an offshore account in order to benefit from tax relief in the country that you are going to.
Q. Will I be regarded as not resident in Hong Kong during my period overseas?
A.Due to the territorial system of taxation in Hong Kong, there is generally no concept of residence or non-residence.
Q. Will I still need to complete a Hong Kong tax return after my departure?
A. To the extent that an individual continues to have Hong Kong source income after departure, there will be a continuing filing obligation in Hong Kong. This could apply in respect of property or business income from a Hong Kong source, or income arising after departure but in respect of services rendered in Hong Kong prior to departure (for example share awards, stock option income or post departure bonuses).
For outbound employees from Hong Kong who continue to hold a Hong Kong employment, both the employer and employee have filing obligation throughout the outbound assignment. No tax clearance is required prior to departure from Hong Kong to commence the outbound assignment.
Q. What kind of tax relief is available in Hong Kong?
A.
Unilateral tax relief
The legislation offers unilateral tax relief in respect of the portion of a persons employment income where it has been subject to tax of a substantially similar nature to Hong Kong salaries tax in the territory where the relevant services were rendered.
No service claim
If you do not render any services in Hong Kong in any year of assessment (i.e. April 1 to March 31), the full amount of the employment income derived in that relevant year of assessment is fully exempt from Hong Kong salaries tax.
60-day claim
Visitors who are not based in Hong Kong whose visits to Hong Kong do not exceed 60 days in a year of assessment will generally be exempt from Hong Kong salaries tax.
Q. Will I have to pay Hong Kong tax in respect of the employment income I will earn overseas?
A. If you are leaving Hong Kong to work overseas for a non-Hong Kong employer those duties will not be taxable in Hong Kong. You will only be taxable in Hong Kong if you have duties there for a Hong Kong employer (e.g. outbound assignment), or if you visit Hong Kong more than 60 days a year for an overseas employer.
If you continue to hold a Hong Kong employment, there is a potential exposure to double tax. Under domestic legislation, however, an exemption is available in respect of such remuneration where it has been subject to tax of a substantially similar nature to Hong Kong salaries tax in the territory where the relevant services were rendered.
Q. Will I have to pay tax in respect of Hong Kong investment income earned while overseas?
A. Hong Kong does not charge income tax in respect of interest and dividends, although property tax is charged on the net assessable value of land, buildings, and other structures.
Q. I plan to sell my Hong Kong property while overseas. Are there any capital gains tax implications?
A. Hong Kong does not impose capital gains tax, but you should confirm whether any tax implications exist in respect of the country that you are going to.
Q. I have a number of Hong Kong company shares. Will I remain liable to capital gains tax if I sell any of these while outside Hong Kong?
A. Hong Kong does not impose capital gains tax, but you should confirm whether any tax implications exist in respect of the country that you are going to.
Q. What are the key points to note regarding departure from Hong Kong under the Hong Kong salaries tax perspective?
A. Since withholding of last month's payment is required for departure cases, it is essential to settle all the outstanding tax liabilities as soon as possible in order to receive the letter of release from the IRD. In addition, please be reminded to provide future contacts to your employer and the IRD incase the IRD has issued any Forms for your completion.
Q. What Social Security contributions will I pay when abroad?
A. As long as you and your local employer in Hong Kong are engaged in an employment contract under the jurisdiction of Hong Kong Employment Ordinance, your employer is required to enroll you in a Mandatory Provident Fund (MPF) scheme regardless of the location of your work.
As Hong Kong has not entered into any Social Security agreements with other countries, you will also be required to pay Social Security contributions in the country that you are going to.
