Air Hong Kong tax debacle

[Bob Hawke]

AHK crew based in SIN and PEN being told the HKIRD maybe seeking upto 6 years in tax arrears with some facing bills of over US$100k. Well thought out basing strategies by masterminds who haven't got a clue about tax, immigration, legal or social responsibilities.

Latest email from the company to staff indicates that they were employed by a branch of AHK (Hong Kong), not the so called registered companies in Singapore and Malaysia. How so?? In so doing AHK are implying that those employees always had a HKG tax liability (but didn't know it), but at the same time when recruiting also said you fall outside of any tax liability because they were so smart to set up such companies so they could bond the ass off some the new joiners.

So now these pilots have a liability that was sold to them as a benefit, in order that AHK didn't have PAY for higher salaries in a taxed environment to make the job attractive - sponging off the rest of society in order to eek out miserable profits without any social or moral conscience to any community. Well it's not very attractive now, and shame on you AHK management for schirking your responsibilities in this regard.

It's reeks of CX basings amateurism again. Oh that's right, ex CX managers working their magic again over at AHK.

So if you want the pilots to accept the fact that they were always under HKIRD then it would be appropiate they have the work permits too, oh and that would invalidate your ****ty bonding scheme, or you can try and keep up the deception of being employed by Sinapore or Malsysian companies so you can go chasing after those naughty bond breakers. BTW guys when you collect the bond money, did you declare that as earnings. Something else the HKIRD needs to follow up; you might be paying for more than you realize.

Good luck chaps.

[hawkeye]

The same issue affects all CX crew on bases. They have tried to pretend that the basings are legitimate in HK law. They are not, but they are still sending out tax info saying that we work for overseas companies. They are doing this on tax forms which can only be illegal in the eyes of HKIRD. HKIRD should tell CX to pay all the back tax to March 2012 and then we can start again.

In fairness the previous GMA, who is now in Canada, was the one who ignored advice from people who knew, (do not include KPMG in that group), and arrogantly blazed a basings trail that will cost CX dear. The longer term legal ramifications will see CX close all the bases, apart from North America. In North American law CX is still a HK company and the law recognises that N/A crews are, in fact, based in HK, just like HKIRD have been saying all along.
Eventually HKIRD will grab the company by the short and curlies.

[AAIGUY]

on a positive note, I imagine the bond is now unenforceable as there are illegal in hk

[FrankR]

I believe that if you reside in HK for 60 days per tax year, you are liable to pay HK taxes, regardless of your nationality, or the structure of your company, where the pay was deposited, or any agreement. Is this what you are finding out?

FR

[InSoMnIaC]

@Aaiguy: it's not a bond:=. its a 'forgivable' loan

[Bob Hawke]

Not in AHKs case, it's a bond.

[BuzzBox]

I believe that if you reside in HK for 60 days per tax year, you are liable to pay HK taxes, regardless of your nationality, or the structure of your company, where the pay was deposited, or any agreement.

From the IRD website:

"The Hong Kong tax system is based on the territorial concept. Salaries tax is imposed on all income arising in or derived from Hong Kong from an office or employment or any pension irrespective of whether tax on that income has been paid in other jurisdictions".

In other words, it has nothing to do with your domicile, residency or where you are paid. If the money originates in Hong Kong, then you will be taxed in Hong Kong, as CX basees discovered last year. However, if you perform part of your duties in other countries, you should only be "assessed on the income attributable to the services you rendered in Hong Kong". You must also show that you have paid tax in another jurisdiction.

[cxorcist]

Buzzbox is 100% correct.

[Mill Worker]

So if one accepted an offer of employment from what was represented as a non-HK company only to find out years later that they were actually working for a HK company with the tax implications, where would that place the employer?

Would the employee be able to sue in either HK or the "foreign" country that they thought they were employed in?

[AsianFever]

So if one accepted an offer of employment from what was represented as a non-HK company only to find out years later that they were actually working for a HK company with the tax implications, where would that place the employer?

Would the employee be able to sue in either HK or the "foreign" country that they thought they were employed in?

Good Question. I would think yes.

[AnAmusedReader]

Bonds are NOT illegal in HKG, never have been. Go and ask any lawyer for confirmation.

[thrustpig]

Not a big deal for RD.

[Sqwak7700]

Welcome to the party boys. Just keep all this mind when you go to work. You can make Cathay/AHK pay for this you know. If this is causing you stress, go see a doctor and go on sick leave for a couple months. And consider all of this while you at work as well. This should be affecting your motivation. BIG TIME.

[AsianFever]

If CX based pilots are facing the same issue. Where do they stand as of today. Are they paying the taxed owed for the past xx years to HKIRD? Is no based pilot paying HKIRD? Has HKIRD asked based pilots to pay?

[nitpicker330]

Talk about a storm in a tea cup with everybody going off half cocked!!

Based Pilots only stopped paying HK Tax 2.5 years ago after Cx incorrectly told us to stop. This has been addressed and we are now paying HK Tax and getting credit back from our home country.

End of story, move on.

[nitpicker330]

Yes we are pissed off, yes we have a big administrative burden on us, yes it's a lot of paperwork BUT it's sort of fixed.

[Bob Hawke]

There's the rub, AHK has been at it more than 5 years, so there is alot of arrears to be considered, so CX guys are getting off lightly if only 2.5 years.

[nitpicker330]

We will get all the money back from the ATO anyway, so apart from a little provisional Tax and a pain in the ass paperwork jungle it could be a lot worse.

Change your name, Bob Hawke is a blight on Aviation and his name should never be brought up in polite conversation. :=

[Bob Hawke]

NP, He sure is. He's selling the country now. Sometimes it's good to be reminded of the dirty little names in the past.

Aside from that the Australian issue is different from SIN & PEN chaps, they've had longer exposure to basing and thus liability. Crews are now actively applying to Scoot, Qatar & Air Asia. The end result will be p155 poor pay in a taxed environment with no benefits. Why hang around?

My thinking is those that created the provlem should pay for the problem.

[AAIGUY]

I did.. as did many of my friends.. before we f'cked off from HKA.

They ARE illegal.

[AnAmusedReader]

Sorry AAIGUY, cannot agree. Below is what my lawyer wrote, what did yours write?

"Bonds are not unlawful in Hong Kong. Put simply, a bond is a term in a contract between an employer and an employee in the same way as, for example, hours of work, rates of pay, amount of leave etc. In aviation a bond is usually linked to an amount of money equivalent to the cost of training which a newly joining pilot agrees to reimburse over a period of time, either by a 'real' monthly deduction from salary or a 'notional' amount per month so long as the pilot remains in employment at the end of the agreed period. Therefore, if an airline states that a job offer is dependent upon reimbursement of training costs by an amount of money or a period of employment (the bond) and the pilot accepts the offer, a contractual relationship is made that is enforceable and is not unlawful."

[de facto]

There was precedent in the US where the suing Airline lost its case as the Judge ruled that an employee could not be forced to stay in a company and miss a better professional opportunity due to a financial bond.

Terms and conditions may not apply outside USA:E

[AHK Gonnabee]

85000 Us$$ for a ****ty A300600 rating.......the Judge is gonna laugh his pants off. (777-Us$ 11500 rating 744-US$11000 ad etc etc)

The bond must any anycase, be legal or not legal, be atleast within reason of he rating acquired, not to mention that these folks are actually employed by "the company" at hand -to bring in $$$$ and get paid the tip in return.

Its a joke guys, cant you see when you are getting scr#$%ed, Oh and the employment hand book for AHK was update 6/2012, see the last line of taxation, if they think this will cover them. (Last ditched panic rush to cover up)

[Turkpilot]

Hi all, i was offered this position and im trying to figure out what is the real take home pay. I have heard 11, or 12. Is that AFTER HKG tax? Also if i live somewhere else do i still need to pay this tax? I heard if you spend less than 60 days a year in HKG, like overnights, your exempt.

Im currently working for an airline in Mainland china. If it is 11 or 12 the pay cut would be quite large, about 5000 a month but my QOL would dramatically improve.

[14182]

Party to the contract is a hong kong based company, and the employment contract is under the jurisdiction of hong kong, or more specifically the labour tribunal of hong kong, and thus you can only lodge a complaint to the labour department of hong kong.

Thinking you were signing a contract from else where would not render your case suitable to be brought up in such jurisdiction.

Hope this helps

[AAIGUY]

Oddly enough all the lawyers we used said the opposite and no one paid..
Has anyone.. I mean ANYONE, ever been chased after leaving HKA before the bond? No. Why do you think that is? The generous nature of your chinese employer?

[Bob Hawke]

Two Captains have resigned over this. More to follow.

[MD330]

Good luck chaps! Lets see how AHK management handle this issue. ;)

Happy landings.

[diablo_caliente]

Im sure the AHK rank and file know how to handle it. Nevertheless it would be a worry having to pay back a possible tax bill.

[hongkongfooey]

Few wires getting crossed here :
In HK it is against the law to acquire money from someone for training they require to carry out the duties of their employment eg training somebody to fly a certain type of aircraft. As AAIGuy said, if bonds were legal do you really think HKA would have let millions of dollars worth walk away ? They might be incredibly stupid and inept but that is more than made up for by their greed.

Singapore, where AHK is based, completely different story, the bond or whatever you want to call it is 100% legal, and the only person that will get laughed out of court is you. In most cases Singapore airlines and AHK will chase you to the ends of the earth and Singapore airlines has never had trouble convincing the courts that an SO endo on a 747 is worth over 100k.

Enjoy

[diablo_caliente]

Wires crossed?

Not sure about that. According to previous posts, seems the SIN and Malaysia base's are not base's after all. So, the bond would appear to fall under HK law and we know what that means. Time will tell I guess!

[kwaiyai]

In Singapore if they do take action just offer 100 dollars a month or if you want just FKOF and watch, it generally aint worth the hassle.
In Malaysia forget it I know so many cases which various companies lost due to unrealistic sum to ask to pay back plus they didnt follow employment regs anyhow. I know at least one Gent who ran during line trg at my present company who still never heard anything after more than 2 YEARS. One of my ex colleugues in FY did 24 hr notice, yes they tried to sue but yet lost due to unrealistic amount. Usually its Big talk := Not my intention to say what to do simply my experiences

[bila]

Hello guys

This thread is to do with HK tax issue and not training bond. Heard all crew may have to pay HK tax whether PEN or SIN base!

Good luck!