Hard Times, Absconding Expatriates and the Possibility of Payne in Hong Kong
Hong Kong Law Journal, Vol. 35, No. 1, p. 129, 2005
Posted: 29 Aug 2006
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 tax from payments to the employee, remit it to the Hong Kong 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.
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