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Amount falls as top HK pay packages are scaled back

Hong Kong's biggest salaries-tax payer handed over  $18 million last financial  year, $4 million less than the previous year and less than half the $41 million paid by the top earner in 2000-2001.

The drop from the 2003-2004 financial  year comes despite a rise of 50 basis points - to 15.5 per cent - in the top tax rate.

Based on this  flat tax rate, the top earner would have pocketed more than $116 million in salary, bonuses, allowances and gains realised on stock options. Taxes paid in 2004-2005 were mainly based on earnings in 2003-2004.

'I think the drop in salaries tax paid by top earners has more to do with their pay packages,' PricewaterhouseCoopers tax partner Tim Lui Tim-leung said.

He suggested that the lacklustre stock market performance in the 2003-2004 financial  year, which was hit by the Sars outbreak, may have put a damper on any attempt to exercise stock options.

The Inland Revenue Department does not identify the top taxpayer. Likely to head the list is Hutchison Whampoa managing director Canning Fok Kin-ning, who reportedly earned about $373 million in 2002-2003 and $125 million a year earlier.

Apparel giant Esprit  reported that its highest-paid director, chief financial controller John Poon Cho-ming, received up to $21 million in remuneration in 2003, not including gains on share options.

David Chan Cheng-chuan,  a vice-president at executive search firm AT Kearney (Hong Kong), said top-level pay packages had fallen over the past three years as housing benefits were reduced and remuneration was based more on performance bonuses.

The top 10 tax contributors paid about $136 million to the government in the past financial  year.

It is the lowest figure in the past five years and is just over half the $256 million paid by the top 10 earners in 2001-2002. But total salaries tax receipts for the 11 months to the end of February saw an increase of 23 per cent year on year,  to $35.9 billion.

During the 11-month period, profits tax, which is levied at 17.5 per cent, came in at $57.7 billion, up 19 per cent from $48.3 billion a year earlier. The biggest companies-tax payer had a bill of  $1.54 billion in 2004-2005, slightly up from the $1.52 billion paid a year earlier.



Top salary earner paid $18m in taxes