2002-03 Annual Report, Inland Revenue Department
(Text Only)

Collection


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 2002-03.

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 2002-03. Electronic payments (by phone, bank ATM or the Internet) are gaining popularity. For Earnings and Profits Tax, 50% of the payment transactions made during the year were through electronic means.

Figure 28 Payment methods

Earnings and Profits Tax - Number of transaction
Payment methods
2001-02
Percentage
2002-03
Percentage
By Post
21%
17%
In Person
33%
33%
By Phone / PPS on Internet
30%
34%
By ATM / Virtual ATM
16%
16%
Total Number of transaction
2,009,094
2,096,691


Earnings and Profits Tax - Amount (Dollars million)
Payment methods
2001-02
Percentage
2002-03
Percentage
By Post
26%
23%
In Person
60%
57%
By Phone / PPS on Internet
8%
14%
By ATM / Virtual ATM
6%
6%
Total Amount
77,749.0
73,028.6


Total Revenue (including other duties) - Number of transaction
Payment methods
2001-02
Percentage
2002-03
Percentage
By Post
19%
15%
In Person
53%
54%
By Phone / PPS on Internet
18%
21%
By ATM / Virtual ATM
10%
10%
Total Number of transaction
3,395,327
3,521,466


Total Revenue (including other duties) - Amounts (Dollars million)
Payment methods
2001-02
Percentage
2002-03
Percentage
By Post
32%
30%
In Person
57%
54%
By Phone / PPS on Internet
6%
11%
By ATM / Virtual ATM
5%
5%
Total Number of transaction
101,327.8
93,138.9

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 2002-03, tax refunds totalling $6.8 billion were made (Figure 29).

Figure 29 Tax refunds
Type of Tax 2001-02 2002-03
Number Amount
(Dollars million)
Number Amount
(Dollars million)
Profits Tax 25,747 3,278.8 26,822 3,492.2
Salaries Tax 298,929 1,344.3 290,963 1,396.4
Property Tax 13,857 108.1 14,481 110.7
Personal Assessment 31,133 286.4 27,014 251.5
Others 11,928 1,040.9 21,217 1,593.4
Total 381,594 6,058.5 380,497 6,844.2

 

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. Action may also be commenced in the District Court. Figure 30 summarizes the recovery actions 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 proceedings to the date of full settlement in addition to the outstanding tax. Figure 31 shows the legal costs and judgment interest collected during 2002-03.

Figure 30 Recovery actions

Recovery notices
Recovery notices 1999-2000 2000-01 2001-02 2002-03
Number of notices 158,793 137,183 121,852 98,664
Tax involved (dollars million) 5,861 5,558 4,491 4,642


Recovery action in the District Court
Recovery action in the District Court 1999-2000 2000-01 2001-02 2002-03
Number of actions 18,892 15,942 11,638 10,395
Tax involved (dollars million) 1,534 1,473 754 918

 

Figure 31 Legal Costs and Judgment Interest collected in 2002-03
Legal costs and judgement interest collected Dollars
Court Cost - Court Fees 2,204,732
Court Cost - Execution Fees 48,935
Fixed Cost 813,852
Judgment Interest - Pre-judgment Interest 3,286,182
Judgment Interest - Post-judgment Interest 9,858,155
Total costs and interest collected 16,211,856

 

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.

Vision, Mission and Values | Contents | Commissioner's Overview | Revenue | Assessing Functions | Collection | Field Audit and Investigation | Taxpayer Services | Information Technology | Human Resources | Legislative Amendments | Environment Report | Miscellaneous | Schedules |

Homepage | Publications and Press Releases | Annual Report | 中文版年報 (Chinese Version)


(Last updated/reviewed : February 3, 2003)