This is straight out of my "Guide to tax return - individuals" booklet from this years HK Tax Package......
Annex B
3. Standard rate of tax;
Tax shall not exceed the standard rate applied to the net total income without allowances, ie total assessable income less total deductions only. The standard rate for 1995/96 onward is 15%
Now the interesting part; The following is the amount of NET TOTAL INCOME at which STANDARD RATE APPLIES;
Single, 0 children; $1,443,000
Single, 1 child; $1,698,000
Single, 2 children; $1,953,000
Married, 0 children; $2,361,000
Married, 1 child; $2,616,000
etc
So as you can see no first officer or second officer in CX pays tax at the standard rate of 15% on 100% of his or her income. Tax is assesed at 2% on the first $35,000. 7% on the next $35,000 and 12% on the next 35,000. The remainder is charged at 17%!!!
Having said that, your rental assistance is taxed as though it were additional income if you don't hold the rental lease in your name. If you hold the lease then the rental paid divided by 10 (ie 10%) is added to your salary as income you are therefore taxed on the CX rental assistance package. You are also taxed on education allowance as though it were income.
So, add all that together and I expect that we do pay tax at the standard rate of 15% on basic salary even though the HK Govt tells me we don't.
Clear as mud I hope. I've never understood the equation and don't ever expect to. That's why I'm a pilot and not an accountant. Throw in the provisional tax and it's even "muddier"!! Don't you just love HK.
By the way, even though we are taxed more than most of the locals you have to like 15% compared to most of our home countries. It's a shame that we don't get much for our tax dollar as expats compared to those that pay no tax.
To answer the origional question about the company with-holding tax it may be something to do with Nth American based tax. Not sure but it rings a bell for based pilots somewhere. No tax is withheld in HK.
[This message has been edited by Thrust (edited 31 May 2001).]