Collection of tax | Refund of tax | Recovery of tax in default

Revenue collected by the 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 2000-01.

Collection of tax

There are various payment methods by which a taxpayer can choose to settle a tax liability. Figure 28 shows the payment methods used by taxpayers in 2000-01.

Figure 28 Payment methods

A continuous growth is recorded for electronic payments - by telephone, bank ATM or the Internet. The total number of such transactions made during 2000-01 increased by 14% over the previous year. 43% of the payments for Earnings and Profits Tax were made through electronic means.

Refund of tax

Refunds are made to taxpayers for various reasons, such as in respect of an overpayment of tax or arising from revision of an assessment. They are issued as expeditiously as possible. During 2000-01, tax refunds totalling $6.2 billion were made (Figure 29).

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 a tax debt remains 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. Action may also be commenced in the District Court. Figure 30 summarizes the recovery action taken by the Department. Upon entry of judgment, a defaulting taxpayer becomes liable to legal costs and interest on the judgment debt for the period from the date of commencement of the proceedings to the date of full settlement in addition to the outstanding tax. Figure 31 shows the legal costs and judgment interest collected during 2000-01.

Figure 30 Recovery actions

A person with tax in default may be prevented from leaving Hong Kong. This, however, requires the Commissioner to satisfy a District Court 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. 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.

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(Last updated/reviewed : February 18, 2002)