clearance on leaving Hong Kong
As soon as the Revenue
receives a notification that a taxpayer is about to leave Hong Kong
permanently, a tax return for that year of assessment
will be issued to the employee. The employee should call at the
Revenue to file the tax return and get the tax assessment for tax
payment as early as possible.
If the person
does not clear his tax liabilities before he leaves Hong Kong, the
Revenue will issue a “recovery letter” to the employer requiring
payment of tax from the sum withheld. If the tax is large, he may be
stopped from leaving Hong Kong.
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If the person has
outstanding share options as part of his taxable income, he can elect
for a notional exercise for computing the gain on the share options.
It assumes that the share options are exercised on a day as chosen by
the person within 7 days before the filing of the related tax return.
Given this assumption, the taxable gain is computed for the year of
departure, and there will be no further tax liability when the share
options are actually exercised or sold afterwards. It is advisable for
the taxpayer to make the election if the taxable gain so computed is
zero or quite small.
If the person withdraws
accrued benefits from a recognized retirement scheme, he can get exemption under
the Proportionate Benefit rule.
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strictly speaking the tax clearance applies to taxable cases only, a person
with no tax payable still need to apply for the clearance if his
employer has made the notification and has withheld payment of his income under
Section 52 of IRO.