Top taxpayer probably netted HK$600 million

PUBLISHED : Thursday, 06 May, 2010, 12:00am
UPDATED : Thursday, 06 May, 2010, 12:00am

Hong Kong's top taxpayer last year probably took home at least HK$600 million, while one highly profitable company accounted for more than 3 per cent of total profits tax receipts, offical figures show.

The biggest salaries tax bill contributed HK$91 million to the Inland Revenue Department. This is the highest since 2005-06 and is almost 30 per cent up from the HK$71 million reported in the 2008-09 financial year. The record is a HK$117 million tax bill in 1994-95.

Based on a 15 per cent standard salaries tax rate, the top taxpayer earned roughly HK$600 million.

The top 10 taxpayers paid a total of HK$367 million to the government in 2009-10, down one fifth from the HK$459 million collected a year earlier. The top 10 taxpayers paid less to the government for the first time since the Sars outbreak in 2003.

In a reflection of the severity of the global downturn, the biggest profits tax bill for 2009-10 was HK$2.63 billion, less than half of the HK$5.91 billion recorded a year earlier. The top 10 companies paying taxes last year contributed HK$11.07 billion to government coffers, far short of the previous year's HK$19.7 billion, while only three companies paid more than HK$1 billion in profits tax compared to seven a year earlier.

None of the taxpayers or companies were identified but it appears unlikely the top honour went to the investment banking community. The shrinking pipeline of lucrative initial public offerings and the public outcry over the global downturn's devastation to household wealth and corporate profits left many bankers without hefty bonuses in 2008.

Salaries tax in 2009-10 was mainly paid on 2008-09 income.

Directors of listed companies, including usual suspect Canning Fok Kin-ning, group managing director of tycoon Li Ka-shing's Hutchison Whampoa, are also not high on the list of top taxpayers. According to the 2008 Hutchison Whampoa annual report, Fok was paid a total of HK$133.3 million in salaries, fees and bonuses. His tax bill is about HK$20 million based on the standard tax rate of 15 per cent, which ranks him below number 10 on the list.

Bank of East Asia chairman and chief executive David Li Kwok-po, the city's highest-paid banker, earned HK$33.5 million, meaning a tax bill of about HK$5 million.

Paying the most salaries tax does not necessarily indicate the highest earnings since some sources of income, like dividends paid on shares, fall outside the tax net. Business tycoons often opt for nominal wages but reap billions from dividends on company shares they own.

Companies in the health or insurance sector may be some of the major contributors of profits tax as the downturn largely wiped out profits at property developers and financial firms.

Inland Revenue figures show tax on corporate profits contributed just over HK$76.6 billion in 2009-10, down more than a quarter year on year, or HK$27.54 billion. Salaries tax improved slightly by 6 per cent, up from HK$39 billion to HK$41.24 billion.

Total tax revenue this fiscal year is estimated to shrink 7 per cent, to just over HK$166.26 billion. All tax revenue is forecast to shrink except profits tax, up 2 per cent to HK$78.5 billion, and betting duty, expected to rise 3 per cent to HK$13.17 billion. Estimates show salaries tax falling by 3 per cent to HK$39.81 billion and stamp duty down 29 per cent to HK$30 billion.