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please explain HK taxes to me...

  1. #1
    ctrbabe1 is offline Registered User
    Join Date
    Oct 2003
    Pok Fu Lam, Hong Kong

    please explain HK taxes to me...

    We are finally faced with having to pay HK taxes, and I'm kind of lost. In the US, they automatically take the taxes out of your pay check, so the fact that we have to save up all year and pay in one lump sum is kind of foreign and scary to me. I have a couple of questions regarding it...

    1) Do you pay every year or every two years?

    2) When you're talking about the exemptions, do you deduct those amounts from your total income? (i.e. minus 50k for the person filing, minus 50k for spouse, minus 50k for each child, etc) and then base the amount you pay on what's left?

    3) Do you really have to pay it all in one lump sum, or can you pay it out quarterly or some other way?

    4) Does anyone know about US taxes in regards to money earned here? Dh is a HK permanent resident (HK born Chinese), and also a US citizen. I've heard that you also have to pay US taxes if you make over US $80k/year. Is that true? And does it matter if he's working as an "expat" or a "local"?

    Thanks in advance for any light you can shed on this for me!!

    All the best,

  2. #2
    nicolejoy's Avatar
    nicolejoy is offline Registered User
    Join Date
    Oct 2007
    North Point

    Hong Kong tax is VERY easy compared to other tax systems.

    The first year, you need to pay for 2 years. The tax year is April-March (if I remember right), and you file soon after then (maybe May or so?) then they send you a bill a few weeks later that is due in two installments in January and April, I think. So we just received our tax bill for the two financial years, 08-09, and in advance 09-10.

    I file online at GovHK: eTAX Account - but the website seems to work better in IE than mozilla for some reason. There, it's as easy as ticking the boxes "yes I am married, I have one child" etc. I think that only one person can claim one child/dependent. But both claim the married person allowance. You can file jointly online as well.

    I think that you need to pay in the two lump sums, but there are loans etc that you can take out to "finance" your tax. I think that most people put money aside themselves though...

    Hong Kong's tax is either a flat rate (last year was 15%), or if it's cheaper, it's progressive - the first $40,000 at 2%, the next $40,000 at 7%, the next $40,000 at 12% and the rest at 17%. Whatever way is cheaper for you. For us, once we had all our deductions and everything, our "flat rate" tax was only 4% - much less than I anticipated!! But we earn a lot less than some expats over here!!

    I don't know the details on US tax, but I do know that the US has world-wide tax. I think you need to file a US tax return even if you're not working there. I'm Australian, and when we left, we just declared that we were "non-residents for tax purposes" and because we have no Australian income, we don't have to file there.

    Hope that helps!! If you have more questions, I'll try to help more :)

  3. #3
    spockey is offline Registered User
    Join Date
    Feb 2007


    As Nicole said, it's pretty straight forward.
    We've just been given our first tax bill since 2006 and it was pretty scary.
    Tax is not automatically deducted. You have to put the money aside on your own each month. I think maximum rate is 17% after whatever rebates you can get. You can calculate it online.

    If you did not put aside the cash for tax and have been billed a large sum, or for whatever reason (My tax bill did not include the child rebate or calculated on a joint assessment), you can simply go to the tax department and see them to sort it out. In the former instance (did not have enough cash to settle in one go), you can organise a monthly repayment over 3-6 months.

    Unlike the Australian tax officers/tax system, the people at the tax department here are super nice! Very patient and accommodating which totally blew me away. The only inconvenience is that you have to make the trip to Wanchai to see them.

    PM me if you have any questions. I've just sorted it all out with them and handed over a good chunk of cash.

  4. #4
    mumsy is offline Registered User
    Join Date
    Jan 2006
    Hong Kong

    As mentioned above, the tax year runs from April to March. In April, you should receive an employer's return from your company detailing all your income. The tax return usually arrives in May and is pretty straightforward to complete. There is a section for stating gross income/housing/gratuities and separate sections for you to claim allowances/deductions.

    Once the govt have processed your return, you will usually get the actual bill around November, due for payment in Jan and Apr the following year. The tax amount calculated is for the year you have worked plus additional 75% provisional tax for the following year.

    I'm not familiar with the US tax system, but I know my american bro-in-law needed to declare his HK income and pay US taxes on this.

    Last edited by mumsy; 08-11-2009 at 11:16 AM. Reason: typo

  5. #5
    Sleuth is offline Registered User
    Join Date
    Jan 2006
    Fo Tan

    When you file your US taxes, don't forget that new foreign bank account form.
    If you are a US citizen, you have to pay US taxes. The first (roughly) $80K is exempt but I don't think that means you can skip filling out the forms if you make less than that. And keep in mind expat benefits like housing are considered income.

    If the US ran their system like the HK system, people would not stand for the high taxes in the US. Writing a check on April 15th would open a lot of eyes.

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