Hong Kong Ordinances

INLAND REVENUE ORDINANCE - SECT 8

Charge of salaries tax

Caution: This is a past version. See the current version here.

PART III

SALARIES TAX

(1) Salaries tax shall, subject to the provisions of this Ordinance, be
charged for each year of assessment on every person in respect of his income
arising in or derived from Hong Kong from the following sources-

   (a)  any office or employment of profit; and

   (b)  any pension.

(1A) For the purposes of this Part, income arising in or derived from Hong
Kong from any employment-

   (a)  includes, without in any way limiting the meaning of the expression
        and subject to paragraph (b), all income derived from services
        rendered in Hong Kong including leave pay attributable to such
        services; (Amended 69 of 1987 s. 2)

   (b)  excludes income derived from services rendered by a person who -

        (i)    is not employed by the Government or as master or member of the
               crew of a ship or as commander or member of the crew of an
               aircraft; and

        (ii)   renders outside Hong Kong all the services in connection with
               his employment; and (Added 2 of 1971 s. 5. Amended 69 of 1987
               s. 2)

   (c)  excludes income derived by a person from services rendered by him in
        any territory outside Hong Kong where-

        (i)    by the laws of the territory where the services are rendered,
               the income is chargeable to tax of substantially the same
               nature as salaries tax under this Ordinance; and

        (ii)   the Commissioner is satisfied that that person has, by
               deduction or otherwise, paid tax of that nature in that
               territory in respect of the income. (Added 69 of 1987 s. 2)

(1B) In determining whether or not all services are rendered outside Hong Kong
for the purposes of subsection (1A) no account shall be taken of services
rendered in Hong Kong during visits not exceeding a total of 60 days in the
basis period for the year of assessment. (Added 2 of 1971 s. 5)

(2) In computing the income of any person for the purposes of subsection (1)
there shall be excluded the following-

   (a)  the official emoluments received by the Governor;

   (b)  the official emoluments of consuls, vice-consuls and persons employed
        on the staff of any consulate, who are subjects or citizens of the
        state which they represent;

   (c)  subject to subsection (4) any sum received by way of commutation of
        pension under-

        (i)    a recognized occupational retirement scheme upon
               termination of  service, death, incapacity or retirement;

        (ii)   the Pensions Ordinance ( Cap 89);

        (iii)  the Pension Benefits Ordinance ( Cap 99); or

        (iv)   the Pension Benefits (Judicial Officers) Ordinance ( Cap 401);
               (Replaced 76 of 1993 s. 3)

   (ca) in the case of a pension attributable to services rendered in any
        office or employment, other than employment by the Government, so much
        of the pension as is not attributable to services rendered in Hong
        Kong; (Added 2 of 1971 s. 5)

   (cb) subject to subsection (4) any sum, other than a pension, withdrawn
        from a recognized occupational retirement scheme upon
        termination of service, death, incapacity or retirement, but, if the
        scheme is set up by an employer not chargeable to tax under Part IV,
        the sum excluded by this paragraph shall not exceed, in the case of
        that part of the sum withdrawn which represents the employer's
        contributions, an amount equal to 15% of the employee's income from
        his office or employment for the year preceding the date of withdrawal
        multiplied by the number of completed years of his service with that
        employer; (Added 2 of 1971 s. 5. Amended 76 of 1993 s. 3)

   (d)  the emoluments payable by the Governments of the members of the
        Commonwealth, other than the Government of Hong Kong, to members of
        Her Majesty's forces and to persons in the permanent service of those
        Governments in Hong Kong in respect of their offices under those
        Governments;

   (e)  wound and disability pensions granted to members of Her Majesty's
        forces;

   (f)  gratuities granted to members of Her Majesty's forces in respect of
        services rendered during war;

   (fa) the Hong Kong War Memorial Pensions and additional benefits paid under
        the Hong Kong War Memorial Pensions Ordinance ( Cap 386); (Added 51 of
        1991 s. 24)

   (g)  any amount arising from a scholarship, exhibition, bursary, or other
        similar educational endowment held by that person where he is
        receiving full time instruction at a university, college, school, or
        other similar educational establishment; (Replaced 26 of 1969 s. 9.
        Amended 1 of 1991 s. 2)

   (h)  the emoluments payable by the Government of the United Kingdom to
        persons in the temporary service of that Government who are in the
        opinion of the Commissioner serving in Hong Kong on United Kingdom
        based terms whereby they are normally employed in the United Kingdom
        but are liable for overseas service or are recruited in the United
        Kingdom specially for service in Hong Kong; (Added 26 of 1969 s. 9)

   (i)  any amount received by way of periodical payments in the nature of
        alimony or maintenance by a person from his or her spouse or former
        spouse; (Added 35 of 1965 s. 5. Amended 2 of 1971 s. 5; 19 of 1991 s.
        2)

   (j)  income derived from services rendered as master or member of the crew
        of a ship or as commander or member of the crew of an aircraft by a
        person who was present in Hong Kong on not more than-

        (i)    a total of 60 days in the basis period for that year of 
               assessment; and

        (ii)   a total of 120 days falling partly within each of the basis 
               periods for 2 consecutive years of assessment, one of which is
               that year  of assessment; (Added 2 of 1971 s. 5. Amended 7 of
               1986 s. 3)

   (k)  any salary or other remuneration paid by another person who is
        chargeable to profits tax under Part IV which, but for section 17(2),
        would be deductible in computing the profits or losses of such other
        person for the purposes of that Part. (Added 7 of 1986 s. 3)

(3) For the purposes of subsection (2)(c) and (cb)- "retirement" (退休)
means-

   (a)  a retirement from the service of the employer at some specified age of
        not less than 45 years; or

   (b)  a retirement after some specified period of service with the employer
        of not less than 10 years; or

   (c)  the attainment of the age of 60 years or some specified age of
        retirement, whichever is the later; "termination of service"
        (服務終止) means a termination of employment with the employer
        other than upon retirement, death or incapacity. (Added 76 of 1993 s.
        3)

(4) (a) Any amount received on termination of service from a
recognized occupational retirement scheme as represents the employer's
contributions under the scheme may only be excluded under subsection

(2)(c) and (cb), as the case may be, to the extent that the amount does not
exceed the proportionate benefit calculated in accordance with paragraph (b).

   (b)  The proportionate benefit is the sum not exceeding the amount bearing
        the same ratio to the accrued benefit of the relevant person as
        represents the employer's contributions under the scheme as the number
        of completed months of service with the employer bears to 120 months:
Provided that in the case of a recognized occupational  retirement scheme
approved by the Commissioner under section 87A at any time prior to its repeal
by the Inland Revenue (Amendment) (No. 5) Ordinance 1993 (76 of 1993), where
any amount payable upon termination of  service in accordance with the rules
of the scheme, as approved by the Commissioner prior to the repeal of that
section, exceeds the proportionate benefit calculated in accordance with this
paragraph, that amount shall be taken to be the proportionate benefit.

   (c)  For the purpose of paragraph (b)- "accrued benefit" (應累算利益)
        means the maximun benefit a person would have been entitled to receive
        under an occupational retirement scheme in respect of his service
        recognized for the purposes of the scheme if, at the date of
        termination of the person's employment, retirement (as defined in
        subsection (3)) has instead taken place. (Added 76 of 1993 s. 3)
        (Replaced 36 of 1955 s. 11. Amended 15 of 1966 s. 2; 7 of 1986 s. 12)
        "retirement" (退休) "termination of service" (服務終止) "accrued
        benefit" (應累算利益)