Hong Kong: The IRD shares its views on various salary tax issues

Global Watch ()

At the 2013 annual meeting between the Hong Kong Inland Revenue Department (IRD) and the Hong Kong Institute of Certified Public Accountants (HKICPA), the IRD expressed its views on a number of salary tax issues that may be of interest to taxpayers. Some of the issues discussed are solely related to the interpretation and application of the domestic law of Hong Kong while others involve application of the Hong Kong treaties.

Some of the important issues discussed at the meeting include: (1) computation of the month of service for determining the exempt amount of retirement benefits upon termination of service, (2) taxation of share awards received by expatriate employees who are subsequently localized, (3) taxability of certain payments upon employment termination, and (4) the interpretation of ‘Income from Employment’ article of the comprehensive double tax arrangement between Hong Kong and the Mainland (HK-Mainland CDTA).

Companies with employees in Hong Kong should take into account the views expressed by the IRD in fulfilling their employers’ tax reporting obligations, managing their employees’ individual tax matters, and formulating their employee compensation policies.