According to the Inland Revenue Ordinance, the following tax clearance procedures are required for individuals and employers before leaving Hong Kong:
Individuals:
- Employment: If salaries tax is payable, the tax must be notified to the Inland Revenue Department one month before the expected date of departure from Hong Kong and the tax clearance must be completed. If you don’t need to pay tax, you don’t need to notify the tax office.
- Rental income from the property under your name: If the property has been sold before departure from Hong Kong and is assessed under personal assessment, you need to notify the Inland Revenue Department (IRD) one month before departure. If the property is not sold, no notice is required, but the new correspondence address (if any) needs to be notified to the Inland Revenue Department. After leaving Hong Kong, you can file an annual tax return to declare the rental income of your property as usual.
- Profits of business under your name: If the business has been terminated before departure, you need to notify the Inland Revenue Department one month before departure. If it is not over, no notification is required, but the new correspondence address (if any) needs to be notified to the Inland Revenue Department. After leaving Hong Kong, you can file an annual tax return to declare the profit/loss of your business as usual.
Employer:
- Salaries tax payment: If an employee is required to be absent from Hong Kong for more than one month and is required to pay salaries tax, the employer must notify the IRD in writing of the employee’s expected date of departure from Hong Kong one month before the employee’s departure from Hong Kong. In addition, the employer is required to suspend any payment to the employee for a period of one month from the date of issue of the notice or until the receipt of the “Letter of Release” issued by the Inland Revenue Department, whichever is earlier. However, if an employee needs to be absent from Hong Kong frequently during their employment, they are not required to notify the IRD and the employer is not required to withhold the payment.
What the employer needs to do when you leave the job:
- Employers should endeavour to comply with the above requirements and check with the employee whether he intends to leave Hong Kong after leaving the service and the expected date of departure before he ceases to leave Hong Kong.
- Employees preparing to leave Hong Kong: Employers are required to remind employees to clear their taxes. The employer is also required to complete and submit Form IR56G and withhold all payments due to him not later than one month before the employee’s expected date of departure from Hong Kong, whichever is earlier, one month from the date of filing of Form IR56G or until the issuance of a Letter of Release by the Inland Revenue Department.
- The employee will not leave Hong Kong: The employer must complete and submit Form IR56F no later than one month before the employee’s cessation of employment.
Penalties for non-compliance:
Both taxpayers and employers are required by law to notify the Inland Revenue Department (IRD) and clear their taxes. Failure to comply is punishable by a fine at level 3.
Employees who will be departing Hong Kong Departure Tax Clearance – What Employers and Employees Should Do/Points to Note https://www.ird.gov.hk/chi/pdf/ir6158c.pdf
