Collection

Revenue collected by the Inland Revenue Department includes tax, additional tax, surcharge and fines. Schedules 16 and 17 provide details of additional tax, surcharge and fines imposed by the Department in respect of earnings and profits tax during 2008-09.

Collection of Tax

There are various payment methods that a taxpayer can choose to settle his tax liability, including electronic payments (by phone, bank ATM or the Internet), payment in person or payment by post. Electronic tax payments have been well received by the public. For earnings and profits tax, 56% of the payment transactions in 2008-09, similar to that in the previous year, were made through electronic means. Figure 28 shows the respective percentages of the different payment methods used by taxpayers under earnings and profits tax and total revenue.

Figure 28 Payment methods

Earnings & profits tax

This is a bar-chart showing analysis of payment transactions for earnings & profits tax by payment methods for 2007-08 and 2008-09.
The figures are as follows:
In 2007-08, the number of transaction is 2,471,224, 10% paid by ATM, 17% by phone, 29% via Internet, 33% in person and 11% by post,
In 2008-09, the number of transaction is 2,354,322, 10% paid by ATM, 18% by phone, 28% via Internet, 34% in person and 10% by post.

This is a bar-chart showing analysis of collections from earnings & profits tax by payment methods for 2007-08 and 2008-09.
The figures are as follows:
In 2007-08, total collections are $133,729.4 million, 2% paid by ATM, 2% by phone, 14% via Internet, 67% in person and 15% by post,
In 2008-09, total collections are $146,143 million, 1% paid by ATM, 2% by phone, 12% via Internet, 69% in person and 16% by post.

Total revenue (including other duties)

This is a bar-chart showing analysis of payment transactions for total IRD collections (including other duties) for 2007-08 and 2008-09.
The figures are as follows:
In 2007-08, the number of transaction is 4,341,130, 6% paid by ATM, 10% by phone, 20% via Internet, 55% in person and 9% by post,
In 2008-09, the number of transaction is 4,170,422, 6% paid by ATM, 11% by phone, 19% via Internet, 55% in person and 9% by post.

This is a bar-chart showing analysis of total IRD collections (including other duties) by payment methods for 2007-08 and 2008-09.
The figures are as follows:
In 2007-08, total collections are $200,696.5 million, 1% paid by ATM, 2% by phone, 9% via Internet, 72% in person and 16% by post,
In 2008-09, total collections are $191,478.7 million, 1% paid by ATM, 2% by phone, 9% via Internet, 70% in person and 18% by post.

Refund of TaxRefunds were made to taxpayers for various reasons, such as overpayment of tax or revision of an assessment. Owing to the reduction of salaries tax, profits tax, property tax and tax charged under personal assessment for the year of assessment 2007-08, some 535,000 refund cases with total refunds of $9.2 billion were made in 2008-09, representing a respective increase of 24% and 26% as compared with the previous year (Figure 29).

Figure 29 Tax refunds

2007-08

2008-09

Type of tax

Number

Amount
($m)

Number

Amount
($m)

Profits tax

29,838

3,642.9

37,337

5,108.7

Salaries tax

346,314

2,025.7

432,013

2,521.4

Property tax

15,335

149.6

19,297

147.2

Personal assessment

25,655

255.5

21,566

205.8

Others

15,276

1,258.5

25,662

1,221.2

Total

432,418

7,332.2

535,875

9,204.3

Recovery of Tax in Default

Taxpayers should pay tax on or before the due date shown on the demand notes issued to them. The vast majority of taxpayers settle their tax liabilities in a timely manner.

A late payment surcharge of 5% will generally be imposed where tax is in default. If tax debts remain outstanding for more than six months after the due date, the Department may impose a further surcharge of 10% on the total unpaid amount.

Any tax in default is immediately recoverable. Recovery notices can be issued to third parties (including employers, bankers and other parties owing money to or holding money on behalf of the defaulting taxpayers) to effect collection. Actions may also be commenced in the District Court. Figure 30 summarises the recovery actions taken by the Department. Upon entry of judgment, a defaulting taxpayer becomes liable to legal costs and interest on judgment debt for the period from the date of commencement of proceedings to the date of full settlement in addition to the outstanding tax. Figure 31 shows the legal costs and judgment interest collected during 2008-09.

Figure 30 Recovery action

Recovery notices

This is a line-chart showing number of recovery notices issued for 2005-06 to 2008-09.
The figures are as follows:
2005-06 is 96,572,
2006-07 is 94,960,
2007-08 is 97,410,
2008-09 is 96,005.

This is a bar-chart showing tax involved for recovery notices issued for 2005-06 to 2008-09.
The figures are as follows:
2005-06 is $5,265 million,
2006-07 is $7,181 million,
2007-08 is $9,121 million,
2008-09 is $8,296 million.

Recovery actions in the District Court

Figure 31 Legal costs and judgment interest collected in 2008-09

Court cost

Court fees

2,393,182

Execution fees

31,636

2,424,818

Fixed cost

997,314

Judgment interest

Pre-judgment interest

2,799,754

Post-judgment interest

17,062,507

19,862,261

Total costs and interest collected

23,284,393

A person with tax in default may be prevented from leaving Hong Kong. This, however, requires the Commissioner to satisfy a District Judge that there are reasonable grounds for believing that the person intends to depart, or has departed, from Hong Kong to reside elsewhere without paying his tax or furnishing adequate security for payment of such tax, for his issuance of the "departure prevention direction". The relevant legislation also provides that the person concerned may appeal to the Court of First Instance of the High Court against a District Judge's decision.