Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Chinese bankers in Hong Kong feel the sting of a tripling tax bill as China’s tax authority collects tariffs on citizens’ global income

Chinese bankers in Hong Kong feel the sting of a tripling tax bill as China’s tax authority collects tariffs on citizens’ global income

China’s tax authority last week moved to tax the global income of Chinese citizens worldwide. That leaves Chinese professionals living in Hong Kong facing tax rate of as much as 45 per cent, compared with the previous 15 per cent

Fears of a Hong Kong brain drain are increasing after China moved to tax its citizens’ global income, undermining the financial hub’s appeal to thousands of bankers and other white-collar workers from the mainland.

Faced with a tax rate as high as 45 per cent – up from about 15 per cent previously – Chinese professionals across Hong Kong are considering moving back home to avoid getting squeezed by both the new levy and sky-high living costs in the former British colony, according to interviews with workers and recruiters.

The prospect of an exodus has upended expectations that mainland talent would help offset any outflow of locals and foreign expatriates from Hong Kong, many of whom are looking to escape the city’s controversial new national security legislation.

While it’s too early to gauge how many people will ultimately move out, professionals of all stripes now have reasons to leave a city that not long ago was viewed as one of the world’s most attractive places to build a career. That risks weighing on Hong Kong’s battered economy and further undermining its status as a premier financial centre.

The focus on China’s new tax regime has intensified in recent weeks after state-owned enterprises in Hong Kong told workers who transferred from the mainland to declare their 2019 income so they can start paying taxes at home. Chinese SOEs are also informing employees in other locations such as Singapore, Bloomberg News reported last week.

While Chinese authorities revised the nation’s tax rules in January 2019, they only recently disclosed detailed instructions on how to comply – a move that caught many workers off guard.

Some companies may act to soften the blow by boosting salaries, particularly for high-ranking executives, but most employees are likely to have to absorb the hit to their take-home pay, according to Feng Ao, president of Wosheng Law Quotient Academy, a consultancy that advises China’s banks, insurers and trusts on tax laws.

“For the vast majority of employees, the chance of giving subsidies and raises depends on the company’s profitability,” Feng said. “It’s unlikely to happen given the global macro environment amid the pandemic.”

One senior executive at a Chinese state-owned bank said his tax bills will now probably wipe out the savings he amassed since moving his family to Hong Kong a few years ago. His colleagues have petitioned superiors in Beijing for relief, but have so far failed to gain much traction.

Some are considering moving back to China or swapping into a Hong Kong passport if they’ve lived in the city long enough to qualify, said the banker, who like several people interviewed for this story asked not to be named discussing a sensitive subject.

Hong Kong has granted more than 340,000 immigration visas to people from mainland China over the past five years, government figures show.

Investment bankers in the city typically earn about 25 per cent to 30 per cent more than those in Shanghai, according to recruiters, though much of that extra pay gets whittled away by higher living costs.

Hong Kong is the world’s sixth-most expensive city for expatriates, compared with 19th for Shanghai and 24th for Beijing, a recent survey by ECA International found.

Some Chinese workers may have little choice but to stick it out in Hong Kong, according to Lee Quane, regional director for Asia at ECA, an advisory firm for expats.

“There’s often a reason why they’re working in Hong Kong rather than in mainland China, because it’s a better location for them to work in terms of the jobs that they do,” Quane said.

Others are hoping they’ll stay under the Chinese government’s radar.

An employee at a major China-backed telecommunications firm said some of her Chinese colleagues who were hired locally are taking a wait-and-see approach and won’t declare income voluntarily. Those who relocated from the mainland are likely to have their Chinese taxes directly deducted, she said.

It’s unclear how stringently Chinese authorities will apply the tax laws to citizens who were hired overseas or who don’t work for state-owned companies. China’s Liaison Office in Hong Kong and the State Taxation Administration didn’t respond to faxes seeking comment.

Donald, an executive at a state-owned Chinese lender in Hong Kong, said his firm is working on a plan to provide interest-free loans or cash payouts to impacted employees, but he doubts the compensation will last beyond a year.

Moving back to mainland China has become one of his biggest priorities. “In a nutshell, my pay is now subject to the high tax rate on the mainland but I need to cover the high cost of living in Hong Kong,” he said. “It’s a double whammy.”

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
European Banks Push for Lower Cross-Border Barriers
Poland's Offshore Wind Sector Attracts Investors
×