Expatriate tax ebook - Hong Kong

The advantageous Salaries Tax treatment of certain benefits in kind, especially housing benefits, can significantly reduce an expatriate’s Salaries Tax liabilities. However, this requires proper planning and documentation before the individual takes up employment in Hong Kong and will require a review of the expatriate’s employment contract, and where necessary, the implementation and operation of proper controls by the employer.

Tax savings can also be made where an expatriate is required to travel outside Hong Kong on business if he has a non Hong Kong source employment. Proper documentation of such employment contracts is required, and it is important that the exact nature of the expatriate's duties in Hong Kong and his role in the employer's Hong Kong office is clearly identified.

The tax equalisation programme for an assignment to Hong Kong should be reviewed before the assignment commences to ensure that it is still valid. The programme should be reviewed on a regular basis during the assignment to recognise changes in tax legislation.

Expatriates who have been granted stock options before coming to Hong Kong should review the Salaries Tax implications of these awards as part of their pre arrival planning as there can be significant tax implications.

Expatriates who participate in stock award schemes (rather than stock option schemes) should seek advice on the Hong Kong Salaries Tax treatment of these awards as part of their pre arrival planning.

Expatriates departing from Hong Kong should review their stock options/stock award scheme entitlements prior to departure.

Expatriates leaving Hong Kong who receive significant termination awards should review those awards to determine whether they are subject to Salaries Tax. In certain circumstances termination payments which are not a reward for services (e.g. salary in lieu of notice) or are non contractual (e.g. compensation for loss of office) may be exempt from Salaries Tax.
Grant Thornton Hong Kong's expatriate tax team can advise expatriates on these and related opportunities and assist both employers and expatriates with tax equalisation policies and Hong Kong tax compliance services.

Information about Hong Kong:

• introduction
• facts and figures
• basis of taxation
• what taxes?
• tax planning opportunities