When your Hong Kong company begins to grow, you encounter an additional headache of payroll management while adhering to all the Hong kong statutory requirements.This is a time-taking process, as all payroll components including remittances, benefits, allowances, taxes and other deductionsmust be carried out judiciously.
Salaries Tax in Hong Kong
Though companies in Hong Kong are lucky in one way, as they are not obligated to deduct income tax from their employees. In fact, in Hong Kong, all individuals have to file tax returns (salaries tax is 15%) by submitting the Form BIR60, if they receive it from the Inland Revenue Department (IRD). They must complete, sign and file it in time even if there’s no income to report. From this year, three supplementary forms to tax returns – BIRSP1 to BIRSP3 – have been introduced, which must be filed along with the Form BIR60.
Here it must be mentioned that in Hong Kong, individuals, as well as companies, are charged tax on all income and profits generated from business activities carried out in Hong Kong. So no taxes are levied on profits from business activities done overseas, even if those are remitted to Hong Kong. Also, notably Hong Kong makes no distinction between residents and non-residents. So a non-resident may have to pay taxes in Hong Kong if the business activities are carried out in the city, while a resident may escape taxation if the profits remitted were due to activities carried out overseas.