Collection
Revenue collected by the Department includes tax, additional tax, surcharge and fines. Schedules 13 and 14 provide details of additional tax, surcharge and fines imposed by the Department in respect of earnings and profits tax during 2012-13.
COLLECTION OF TAX
Taxpayers can conveniently settle their tax liabilities by various payment methods, including electronic payment (by phone, bank ATM or the Internet), payment in person or payment by post. From August 2012, apart from the post offices, cash payment for most tax bills can be made in person at designated convenience stores. For earnings and profits tax, electronic payment remains most popular. 56% of the earnings and profits tax payment transactions in 2012-13 were made through electronic means. Figure 24 shows the respective percentages of the different payment methods used by taxpayers under earnings and profits tax and total revenue.
REFUND OF TAX
Tax refunds were made mainly due to overpayment of tax by taxpayers and revision of assessments. There were 642,405 refund cases in 2012-13, representing an increase of 31%. The total amount of refunds was $11.4 billion, representing an increase of $2.1 billion or 23% compared with the previous year (Figure 25).
| 2011-12 | 2012-13 | |||
|---|---|---|---|---|
| Type of tax | Number | Amount ($m) | Number | Amount ($m) |
| Profits tax | 32,899 | 5,257.6 | 43,179 | 6,514.1 |
| Salaries tax | 398,986 | 2,355.7 | 523,190 | 3,044.9 |
| Property tax | 17,212 | 127.1 | 16,540 | 132.2 |
| Personal assessment | 25,484 | 245.4 | 28,990 | 273.3 |
| Others | 16,955 | 1,264.9 | 30,506 | 1,415.3 |
| Total | 491,536 | 9,250.7 | 642,405 | 11,379.8 |
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 employers, bankers, debtors and persons holding money on behalf of the defaulting taxpayers to effect collection. Actions may also be commenced in the District Court. Figure 26 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 27 shows the legal costs and judgment interest collected during 2012-13.
| $ | $ | |
|---|---|---|
| Court cost | ||
| Court fees | 1,609,372 | |
| Execution fees | 22,960 | 1,632,332 |
| Fixed cost | 680,977 | |
| Judgment interest | ||
| Pre-judgment interest | 5,095,162 | |
| Post-judgment interest | 24,343,721 | 29,438,883 |
| Total costs and interest collected | 31,752,192 |
Furthermore, the Commissioner may apply to a District Judge to prevent a person with tax in default from leaving Hong Kong. If the District Judge is satisfied that it is in the public interest to ensure that the person does not depart from Hong Kong, or if he returns, does not depart again, without first paying the tax or furnishing security to the satisfaction of the Inland Revenue Department for payment of that tax, he shall issue the “departure prevention direction”. The person concerned has the right to appeal to the Court of First Instance of the High Court against the District Judge’s decision.