Hard Times, Absconding Expatriates and the Possibility of Paye in Hong Kong

19 Pages Posted: 21 May 2014

See all articles by Elaine Lee

Elaine Lee

Baker & McKenzie, Hong Kong Office

Michael Littlewood

University of Auckland - Faculty of Law

Date Written: May 20, 2014

Abstract

In other developed jurisdictions, tax on income from employment is typically collected by means of PAYE (Pay-As-You-Earn). That is, the employer is required to withhold the tax from payments to the employee; remit it to the government; and pay to the employee only the balance. In Hong Kong, however, there is no PAYE. Rather, persons liable to tax on income from employment are obliged to discharge the liability directly themselves. At various times since 1940, when taxes on income were first introduced in Hong Kong, the possibility has been raised of establishing some form of PAYE in the territory. Most recently, discussion of this topic has been prompted by the financial difficulties encountered by the government in recent years and by the revelation that significant amounts of revenue have been lost as a result of persons liable for tax leaving the jurisdiction without paying. This article examines both the problems posed by the current system and the possibility of reform. It concludes that some tightening of the current system might be desirable but that it would be premature and undesirable, at this juncture, to introduce PAYE in Hong Kong.

Keywords: Hong Kong, tax, PAYE, pay-as-you-earn

Suggested Citation

Lee, Elaine and Littlewood, Michael, Hard Times, Absconding Expatriates and the Possibility of Paye in Hong Kong (May 20, 2014). Available at SSRN: https://ssrn.com/abstract=2439065 or http://dx.doi.org/10.2139/ssrn.2439065

Elaine Lee

Baker & McKenzie, Hong Kong Office ( email )

23rd Floor, One Pacific Place
88 Queensway
Hong Kong
China

Michael Littlewood (Contact Author)

University of Auckland - Faculty of Law ( email )

Private Bag 92019
Auckland Mail Centre
Auckland, 1142
New Zealand

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