Biggest taxpayer forks out HK$79m
Hong Kong's biggest taxpayer handed over HK$79 million in salaries tax last year, while one highly profitable company accounted for 3 per cent of all profits tax generated in the city, official figures show.
The identity of the top taxpayer was not disclosed, but it is likely to have been Canning Fok Kin-ning, group managing director of tycoon Li Ka-shing's Hutchison Whampoa empire. He earned HK$170 million last year, of which HK$157 million was a bonus. Fok is often assumed to have paid the most tax.
Only once in the past five years has the biggest salaries-tax payer's bill been higher - w in 2009-10, when it was HK$91 million.
Revenue from the 10 biggest taxpayers in the 2011-12 financial year amounted to HK$498 million, an 82 per cent increase on the HK$274 million from the top 10 in 2010-11, Inland Revenue Department figures show.
One expert said the leap in payments - and the fact that the government's tax revenue for last year grew to a record HK$238.3 billion - suggested the rich may have cashed in stock options in the expectation of gloomy economic times ahead.
Another expert, Taxation Institute president Philip Hung, said the figures for corporate tax and the dominance of a small number of companies pointed to the potential dangers of a narrow tax base.
'Our financial secretary has already given a negative note in his budget speech this year. In fact, his thinking has been shared by the companies at an earlier stage. Some predicted the property market would go downwards,' Hung said. 'It is not surprising for the staff of these companies [that predicted a negative economic outlook] to exercise their stock options at that point in time.'
He said the taking up of options was one-off behaviour, which was unlikely to be repeated in later years.
Neither Hung nor Jeremy Choi, a tax partner at PricewaterhouseCoopers, would offer an estimate of the salaries of the top taxpayers, since the calculation would involve numerous variables and their high bills were racked up from a combination of bonus and stock options, not pay rises.
Choi said the higher tax revenue did not reflect a general increase in salaries, but 'it may be a reflection of some companies making big profits, like those in the real estate business'.
The most profitable firm on the list paid HK$3.52 billion.
Hung said the fact that one firm was such a big contributor was unhealthy and showed the need for the tax base to be widened. 'Apart from a few large developers, these are likely to be the multinational investment companies based in Hong Kong, which are attracted to the city's low- tax environment,' he said. 'Can you imagine what will happen to the government's revenue if they relocate to other Asian cities with better air quality and infrastructure? It's also time for the government to rethink how to retain these talents [of individual taxpayers] and companies.'
Owing to the city's narrow tax base, the highest-earning 200,000 individuals paid 80 per cent of the salaries tax. And just 10 per cent of roughly 91,000 firms paid profits tax.
The government said this week it had conducted two studies on options for widening the tax base, but found no consensus in society.