The organiser of Hong Kong’s flagship arts event was almost a year late in filing tax returns for nearly 30 overseas artists who performed at the 2018 festival, the city’s chief auditor has found. The Director of Audit’s report on Wednesday said it was a “matter of priority” for the leaders of the Hong Kong Arts Festival (HKAF) to submit tax documents to the authorities for 29 performance contracts for last year’s month-long festival. The city auditor also urged the non-profit HKAF Society Limited to look into whether any tax filings for overseas artists had been missed in previous years. The HKAF Society has organised the festival since 1973. The HKAF is supported by government funding, public donations and ticket sales. In 2018, the three sources accounted for 39 per cent, 46 per cent and 38 per cent of the event’s budget. The Director of Audit report is an twice-yearly assessment of government-funded projects. The audit, which is overseen by the Audit Commission, does not notify in advance what projects and government departments will be scrutinised. By Hong Kong’s tax regulations, the HKAF must submit a Notification of Arrival in Hong Kong of Non-resident Entertainers(s)/Sportsmen as soon as one of the festival’s visiting artists enters the city. The HKAF, which pays the overseas artists for their work, should settle the amount of the artists’ profit tax owed to the city by retaining part of its payment to the performers, according to the Inland Revenue Department. The profit tax is about 10 per cent, according to the tax code. The 2019 Budget proposed a one-off reduction of 75 per cent of the final tax payable with a ceiling of HK$20,000 (US$2,549) per case. The audit revealed that by the end of January – almost one year after the 2018 festival – the HKAF had submitted forms for only 13 of the 42 performances involving overseas artists. Forms for the remaining 29 were overdue by 10 to 11 months, according to the audit. The HKAF said the tax paid for the 13 reported performances was about HK$500,000, and that the 29 outstanding forms were submitted in February and March. Tisa Ho, the festival’s executive director, said by email that the taxes owed in the late forms was about HK$80,000. Ho did not name the overseas artists involved. New funding formula for Hong Kong Arts Festival could deliver a bigger pie “A check on the submission for the previous year showed that all forms had been duly submitted,” the group said. In its defence, the HKAF said the delay in submitting the tax forms was mainly because of staff turnover. In 2018, employee turnover at the HKAF was 27 per cent, with 17 staff members leaving, and 45 per cent of its staff was new by the year end, according to the audit. “High staff turnover is not conducive to operational efficiency and fulfilling the mission. [The HKAF] needs to step up efforts to address the high turnover rate of staff, taking into account of the staff’s reasons for leaving,” the report said. Among the 42 staff who left the HKAF from 2016 to 2018, the most commonly cited reasons were personal needs, health problems, finding a new job and word pressure. Ho said the staffing problem would not be solved any time soon. “There has been major recruitment from large arts organisations in the last two years, and this is likely to continue as new venues and new initiatives come on stream,” said Ho in her written response to the audit report. Ho also said the HKAF would include the filing of the correct tax forms in its artists’ management checklist in the future.