Tax Clearance: Things to be done by Employer and Employee
2022-03-10
Tax Clearance: Things to be done by Employer and Employee
Tips for Employer:
The IRO provides that where an individual, who is chargeable to tax,
intends to leave Hong Kong for any period exceeding 1 month, he/she has to notify the IRD. Hence, when a taxpayer intends to migrate to other countries, to study overseas or to work overseas, he/she must notify the IRD and settle all taxes before departure
However, the requirements for notification of impending departure and withholding of payments do not apply to an employee who is required in the course of employment to leave Hong Kong at frequent intervals.
In sum, two actions to take:
1) submit IR56G to inform IRD
2) withhold all payment for a period of one month
Penalty: Taxpayers and relevant employers must fulfill their legal obligations to notify the IRD for impending departure cases and follow the tax clearance procedures as described above. Failure to comply with the requirements may result in penalty - a fine at level 3. ( Fine at level 3 is $10,000)
Tips for Employee:
Check carefully the IR56G form after received from the employer
Employee must notify IRD not later than 1 month before expected date of departure, you may call or email IRD to request for issuing a tax return BIR60. Taxpayer must completed and submit the said return within a specific period, usually will be a month. Otherwise,IRD may iusse an estimate assessment based on avavliable information.
To expedite the procedure, it is suggested that the taxpayer can bring along the IR56G, the completed BIR60 and the supporting documents for all deductions/allowances claimed (e.g. payroll slips, expenses receipts, full set of bank statement and repayment schedule for mortgage, Birth cert of newborn child, Cert. of Marriage) to IRD
After received the assessment, pay tax on time. If pay tax by cash, EPS, ATM or cashier order, IRD can issue the Letter of Release on the same day.
If there is no more additional remuneration received, the procedure is completed.
Employee About to Leave Hong Kong: Things to be done by Employer and Employee
Employer
Employee
Not Later than 1 month before the expected date of department
File IR56G, and provide a copy to the employee
Remind the employee to clear the tax
Withold all payment of money or money's worth to the employee for a period of one month from the date on which month the IR56G was given, or until receipt of the Letter of Release (IR607) issued by the IRD, whichever is earlier.
Notify the IRD of the inteneded date of departure.
Submit Tax Return (BIR60)
To expedite the procedure, you may bring along the BIR56G copy provided by the employer, payroll slip, supporting documents to the IRD
Before leaving Hong Kong
Release al payment of money or money's worth to the employee after expiry of the money-withholding period which is one month from the date on which the IR56G was given, or upon receipt of the Letter of Release issued by the Department, which every is earlier.
Payment of Tax ( to expedite the procedure suggest to pay by cash,, EPS, ATM or cashier order) After paying all taxes, taxpayer can go to IRd to collect the Letter of Release.
After Tax Clearance
Submit additional / revised clearance IR56G if other remuneration is paid, or share awards are vested to the employee after tax clearance.
Withhold all payment of money or money’s worth to the employee (see above for the time to withhold the moneys).
Submit IR56B for the relevant year of assessment if the employee exercised share options previously granted after tax clearance except the employee has elected for a notional exercise of the share options.
If additional remuneration is received by/accrued to you, inform the IRD in writing.
If there is still income derived from Hong Kong, file Tax Return as normal or notify the Department in writing.
If any share awards are vested in you after tax clearance, inform the Department in writing except you have elected to settle the tax liability through “deemed vesting” of otherwise unvested shares before departure.
If you exercise any share options after tax clearance, inform the Department in writing except you have elected for a notional exercise of the share options.
