Be thankful for the city's fuss-free tax system

We may not realise how much we have to be grateful for until a visit to other countries

PUBLISHED : Friday, 30 August, 2013, 12:00am
UPDATED : Friday, 30 August, 2013, 3:48am

It used to be a favourite subject with which to tease friends from Europe and the United States: that I did my annual tax return myself "in around five minutes, or 10 if I go really slowly".

In Europe, even straightforward returns take much longer than that, and in the US, many now feel the need to hire an accountant. But Hong Kong's boast of having a "low, simple and predictable" tax regime has become so much of a dry boring slogan that we tend to take it for granted.

It took a recent visit to Spain - and a modest amount of shopping - to remind me of how much we have to be grateful for. No visit to Catalonia would be complete without a pilgrimage to Camp Nou, home of the FC Barcelona, especially for those with a (near) teenage son.

After the tour, we found ourselves in the souvenir shop and, several items later, I found myself handing over my credit card.

Then the adventure began. "Are you visiting from outside Europe?" the salesgirl asked. Indeed we were, came the reply. "That means you are exempt from the sales tax I just charged you," she said. "I have to charge it, but you can apply for a refund right away in the basement."

Sure enough, in the basement was a counter marked "tax refunds" staffed by a brilliant linguist in her 20s, who could explain the procedures in six languages.

After viewing my passport, she confirmed I was entitled to a refund of the €38 (HK$390) tax that I paid upstairs. Would I like it now or later? Not a question you have to ask a Hong Kong consumer twice: I opted for now.

She promptly handed over €36 and 10 cents. "We charge a commission of 5 per cent for processing the refunds." With a slight grimace, I turned to leave, but she called me back.

"When you leave Europe to fly back to Hong Kong, you must take this form with you to the airport, and find the special customs counter, and get the police to chop this receipt and form I am about to give you, then post it in this envelope back to the tax authorities in Madrid," she instructed.

And to emphasise the importance of doing this in the manner prescribed, she warned: "If the authorities don't receive the envelope back in time, the receipt you have just signed for the refund gives them the power to charge €54 to your credit card as penalty."

What a system (I use the term loosely). I must pay a tax I am exempt from, then pay a commission to get it back, then if something goes wrong with the paperwork at their end, I must pay a penalty.

They say there is nothing certain except death and taxes. I somehow got the feeling that if the European Commission were in charge of death, everyone would have to live forever because it would be too complicated to die.

Mike Rowse is managing director of Stanton Chase International and an adjunct professor at Chinese University. mike@rowse.com.hk