H. Taxpayer who is about to leave Hong Kong
For taxpayers who are getting ready to depart Hong Kong for over a month, there are additional requirements.
The Inland Revenue Ordinance mandates that taxpayers who intend to migrate for the purpose of studying or working abroad must give the Inland Revenue Department written notice at least 1 month prior to the anticipated departure date. Failing to do so may result in a fine at level 3 (currently $10,000). However, this does not apply to individuals who travel frequently during their course of employment.
What the taxpayer should do:
- Notify your employer of your anticipated departure date.
- Provide the Inland Revenue Department 1 months’ notice of your planned departure date. You may call or write to the Inland Revenue Department by email, fax or mail. Include your Hong Kong postal address, contact phone number, and an international address for ease of future correspondence.
- Submit a Tax Return - Individual (BIR60) (which would be issued to you by the Inland Revenue Department upon notification of paragraph (1)).
- The taxpayer may approach the Inland Revenue Department's Assessing Group which manages his case (if known), or the Central Enquiry Counter (G/F, Inland Revenue Centre), and present the following documents, if they want their tax clearance to be processed quickly:
- a copy of their IR56G (prepared by the employer) or Form 1R56J in case of government servant;
- notice of termination of employment;
- notice of final payment of remuneration; and
any other documentation necessary to substantiate deduction and allowance claims.
In practice, if there is any special circumstance where you need to depart Hong Kong in less than 1 month, you are suggested to approach the Inland Revenue Department in person to make your case and to deal with the tax clearance process as quickly as possible to mitigate any risk of penalty.
An assessment notice will often be issued before the taxpayer departs. If the taxpayer objects to the assessment, they should raise their objection(s), but they could also need to pay the full amount of tax due right away or buy tax reserve certificates for the amount of tax that is being contested.
a. Note: If the Inland Revenue Department does not receive your completed return within the specified period, or if it is impracticable issue a Tax Return or if the expected date of month from the date on which departure is imminent, the Inland Revenue Department will issue an estimated assessment based on the available information. The estimated assessment may be excessive and you may have to lodge objections.
- Pay tax in return for payment receipts.
- To acquire a copy of the Letter of Release ("Letter"), payment receipts must be presented to the Collection Section (4/F of the Inland Revenue Centre). If payment is made by way of:
- Cash, EPS or cashier order, the Letter will be issued immediately;
- PPS or via Internet, the Letter will be received about 2 working days after the Inland Revenue Department receives payment confirmation from the paying institution;
- Personal cheque or mixed payments (e.g., cash and EPS), a Letter of Release is normally sent by post 10 days after receipt;
- Even where the taxpayer is exempt from tax, the Inland Revenue Department will still continue to issue a Letter of Release upon completion of the tax clearance procedures.
After tax clearance, the taxpayer may still have to further inform the Inland Revenue Department in writing where:
- Additional remuneration is received or accrued (for example, additional bonus);
- Income is derived from Hong Kong (regular Tax Returns must be filed);
- Share awards vested in the taxpayer after tax clearance; and
- Taxpayer exercised any share options after tax clearance.
If you are entitled to additional remuneration giving rise to further Salaries Tax liabilities after tax clearance, you and your employer have to go through the tax clearance process again, which means your employer is required to file an additional/revised Form IR56G to report the bonus and not to make any payment of money or money's worth for a period of one month from the date of giving notice.
I have furnished the Tax Return, what is the earliest time I can expect to collect my tax demand note for tax clearance purpose?
If a properly completed Tax Return with supporting documents is furnished in person directly to the assessing officer handling your case and early tax clearance has been requested, you may be able to receive your tax demand note on the date following the date of furnishing the Tax Return at the earliest.
Duties of an employer
The Inland Revenue Ordinance requires the employer of an employee who is chargeable to Salaries Tax and is about to leave Hong Kong for more than one month to notify the Inland Revenue Department in writing of the expected date of departure of the employee at least one month prior to the departure date. The employer is also required to withhold any payments to the employee for a period of one month from the date on which the notification was given, or until the abovementioned Letter of Release is received from the Inland Revenue Department, whichever is earlier. But this does not apply to an employee who is required in the course of employment to leave Hong Kong at frequent intervals. Failure of such will result in a fine at level 3 (currently $10,000).
Tax clearance for other types of tax obligations
The taxpayer leaving Hong Kong would also have to obtain tax clearance in respect of its property and business income, if any:
- Rental income from property owned: If the property has been sold before departure and Personal Assessment is elected, the departing taxpayer is required to notify the Inland Revenue Department at least one month before departure. Otherwise, notification is not required, and the taxpayer is only required to inform the Inland Revenue Department of the new postal address if applicable and file annual Tax Return for rental income from the property as usual.
- Profits from business owned: If business has ceased prior to departure, the leaving taxpayer is required to notify the Inland Revenue Department at least one month before departure. Otherwise, notification is not required but the taxpayer has to inform the Inland Revenue Department of the new postal address if applicable and file annual Tax Return for profit/loss from the business as usual.
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