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Salary Tax and Salary Arrangment
A well-structured remuneration policy can motivate employees and attract talents, and ensure sustained productivity growth, and create value for the company. We can help to develop a cost-effective pay policy, or set the remuneration package for your company's personal or overseas employees, and identify and submit individual tax returns and employee tax returns. According to (Cap. 112) Section 8 (1) of "the Inland Revenue Ordinance", any person derived from the following sources and in Hong Kong arising in or derived from Hong Kong's income tax shall be levied salary tax in each year of assessment:
1.Any profitable jobs or employment; or
2. Any pension.
Simply speaking, if you get revenue / reward through providing services in Hong Kong according to a contract of employment, it may be required to pay salaries tax. However, in the calculation of salaries tax, taxpayers may claim deduction of part of the taxable income and access to allowances to reduce the tax burden.
Salaries tax is charged according to the taxable income calculations of each year of assessment, but the amount of income of this year have to wait to be ascertained until the end of the year, therefore, the Department will collect a Provisional Salaries Tax first in this year of assessment, and only adjust after having the amount of relevant income and taxable emolument next year. In the adjustment, the paid provisional salaries tax of this year of assessment will first be used to offset the chargeable salary tax. If there is a surplus, it is used to offset the provisional tax next year of assessment. The computational Methods will be explained again in the follow questionnaires.
The year of assessment: refers to the April 1 each year to the March 31 next year
