Long arm of UK taxman reaches city
Some of the 265,000 British citizens in Hong Kong could be affected under a taxation agreement between the United Kingdom and Switzerland.
UK taxpayers with bank accounts in Switzerland will have to disclose their account details or be taxed up to 41 per cent of their balance under a deal between the two countries. The UK-Swiss Confederation Taxation Cooperation Agreement, which was signed in 2011 takes effect this year and is designed to crack down on tax evasion.
Hongkongers who may have registered a Swiss account with a British address could also be covered by the agreement, said Democratic Party lawmaker James To Kun-sun.
Most of the British taxpayers will probably choose to disclose their account details rather than to face the penalty, said Marcellus Wong Yui-keung, a senior tax adviser at PricewaterhouseCoopers Hong Kong. The penalty of up to 41 per cent of the account balance was very high, he said.
"People would rather choose to disclose and argue with the government, hoping that some money would turn out not to be taxed," said Wong.
Under the agreement British holders of Swiss accounts who choose not to disclose their accounts will have to make on May 31, a one-off payment of 21 per cent to 41 per cent of their total account balance backdated to the end of 2010 or last year, based on calculations by the UK tax office.
If they fail to do so, an amount - termed withholding tax - will be deducted from their accounts each year until they disclose their details. But if the taxpayers disclose their Swiss assets, they will not be subject to withholding tax. "I believe that most people will not need to pay the tax [after disclosure]," said Wong.