[BenderBends]

Ok.....

so I am working for a US based company, who has offices in HK.
I am currently paid through the US office.

When my VISA is ready (a few weeks) I will be moving to HK.
When I move, I will be getting paid through the HK office.

I will also work many days of the week in China mainland. So i will be partly in HK and partly in China, and I will still be traveling a few times to work in the US office.

My question is how will my taxes be affected?
I am told I will have to be taxed by HKSAR, as well as US, but what about China?
And am I going to be losing a lot of money because of this?

I will be making about 50K if that matters.

Thanks in advance.

What is the best way to arrange my salary so that I get the least taxed, or the least amount of problems?

[PDLM]

Assuming the "50K" is US$ per year then that is less than the exemption for overseas earnings of US$80K per year so you will not have to pay any US tax. If your office and home are in HK and you aren't paid at all in China then you should be able to avoid mainland China tax just by keeping your head down. So you'll end up just paying HK tax. You can minimize this by getting some of your salary specified as "hosuing allowance" in your contract assuming the employer has "effective controls" on that. See other discussions on this board for details. I guess you would end up paying about US$6K in tax altogether.

[BenderBends]

it is us dollars,

and the apartment will be in companies name. And they will be paying for it as well.


i will be going by end of october...

according to the US IRS site, it says something like i have to be there for 330 days or more from jan1 to jan1.

So that means from october to december i will be taxed by both US and HK...... and from jan to jan i will be taxed by HK only.

What if i get paid from US office til jan. Can i avoid being taxed by both countries til december? then switch my payroll to HK office and be taxed by only HK?

[penguinsix]

The US exemption is not going to take effect for 12 months though, so I think...

[penguinsix]

"and from jan to jan i will be taxed by HK only."

Ummm...let me see...and I'm not a tax expert (but search the forums here for many more details).

If you are a US citizen, or a green card holder, you will NEVER be in a situation where you are not taxed by the US government. Your income, no matter where you live, and sometimes even if you surrender your passport even, is considered US income (very long story--read all about it elsewhere).

That being said, after you spend 330 days (I thought it was a year but maybe it is 330 days) you are eligible for that $80k exemption. It's never been clearly explained to me, but I think you may have to file an amended return the first year you file as it is more than likely you will hit a filing date before the 330 days passes. Maybe someone hear has direct experience (I'm never overseas long enough to get that damn exemption).

I should also note some states don't care where you live--if you spend > 183 days in that state or own property in that state, they tax you as a resident.

Be careful about China. Under a treaty, if you work more than 183 days in China you get PRC taxes as well I think.

http://www.expatplanner.com/Tax_questions.htm

[BenderBends]

if my company deposits my paycheck into a US bank account....
and the housing is in my companies name....

the only thing I would have is a HKID and maybe open a bank account......

would i still be taxed by HK? I think it will be easier for me to avoid HK taxes...so I am just seeing how to stay in the clear so to speak

[Melkir]

A few of my co-workers use US Asia Tax to handle their US/Asia taxes. I've only been here 10 months and tax advisement was part of my reloc package but I will certainly use them next year (when the pinch really comes in).

There is really no excuse in the world to not consult a professional about your tax status.

[BenderBends]

one last question:

if i am being paid through the HK office, then the US government will not be aware of my pay.

is it possible to hide this?
if i must report this, do I report at the end of year and pay what i owe in one large lump of cash? or can i be taxed by US per pay period?

[Expatriate]

In HK the tax depends on where you get your income - if in HK, then that is your taxable amount.

In China the tax depends on where you work. As long as you work physically in China, you need to pay tax in China for the amount of money you get for that work. Not many people know that.

Alternatively, if the company in China is paying your company in HK for your work, then the China-company needs to deduct (salary) tax from the transferred amount. But that shouldn't be your concern.

In China rules and laws are made by the state, the province, and the city. Especially for tax, you find differences in different cities, towns, villages, even city districts. And of course, they change all the time.

The good thing is, not all laws and rules are enforced.
The bad thing is, they are enforced, when it is most inconvenient.

[PDLM]

Originally Posted by Expatriate

In HK the tax depends on where you get your income - if in HK, then that is your taxable amount.

This is simply wrong.

From: http://www.ird.gov.hk/eng/tax/ind_sal.htm Salaries tax:

"The Scope of the Charge

This tax is imposed on all income arising in or derived from Hong Kong from an office or employment or any pension.

"Income arising in or derived from Hong Kong", without in any way limiting the meaning of the expression, includes all income derived from services rendered in Hong Kong."

So it doesn't matter if you are paid in HK or elsewhere, it is where you do the work leading to the income that matters.

This is exactly as you describe for China (I have never been taxed there so I cannot conirm if you've got that right or wrong), and is more or less the way it is done in most countries (i.e. on the basis of place(s) of employment and/or residence) except those few that tax you on the basis of citizenship (e.g. the USA).