Recovering Tax in Default
Tax should be paid on or before the due date as stipulated in the notice of assessment. If tax is not paid by the due date, tax is deemed to be in default. The Inland Revenue Department (IRD) will take immediate actions to secure tax payment and recover the tax from the tax-defaulters.
Recovery Actions taken by the IRD
Imposition of surcharges on tax in default
- 5% will be imposed on the total amount of tax in default including the second instalment amount which will be immediately due if the first instalment is not paid by the due date.
- 10% will be further imposed on all unpaid amount (including 5% surcharge) after the expiry of 6 months from the due date.
Issue of recovery notice to third parties including the employer, banker, tenant, debtor and customer etc. who owe or hold money due to the defaulting taxpayer
- Recovery notices to third parties are normally issued if the tax inclusive of any surcharge imposed remains unsettled.
- The person to whom recovery notice is issued must pay money, if any, not exceeding the amount of tax in default held on account of the defaulter to the IRD within a stipulated time. Failure to do so will render the person personally liable for the whole of the tax which he was required to pay.
- If the third party is an employer, the employer should follow the requirements under section 32(3) of the Employment Ordinance (Cap. 57) when deducting the wages for payment of tax to the IRD i.e. the total of all deductions, including other deducted item(s) made in one wage period shall not exceed one half of the wages payable in that period except under some specified circumstances. For details regarding the Employment Ordinance, please visit the homepage of the Labour Department.
Institution of recovery proceedings in the District Court
- The IRD may apply to the District Court to institute civil jurisdiction action against tax defaulter in respect of the overdue tax. The defaulter will be liable to the court fee, fixed costs and interest on the judgment sum from the date of commencement of proceedings to the date of full settlement in addition to the outstanding tax due upon entry of judgment.
- If the outstanding judgment debt remains unsettled, the IRD will issue a writ of fieri facias to levy execution against the movable property of the defaulter, or apply for a charging order on the immovable property belonging to the defaulter. In warranted cases, bankruptcy/liquidation proceedings will be pursued.
Application to the District Court for Departure Prevention Direction
- If a person has not paid all tax assessed upon him/her and that he/she intends to depart or has departed from Hong Kong to reside elsewhere, the Commissioner of Inland Revenue may apply to the District Court for a direction to prevent the person from departing Hong Kong.
What You Can Help in Tax Recovery
You, as a taxpayer should
- pay tax on time to avoid penalty and recovery actions
- pay tax on or before the due date even if you object or appeal against the assessment unless we agree to hold over the tax
- make tax clearance before departures from Hong Kong for any period exceeding 1 month
- apply for instalment payment before the tax due date in case of genuine financial difficulties
We will consider realistic and reasonable repayment proposals supported by documents such as bank statements, commitments etc. Please take note that surcharge remains payable for all unsettled tax after the due date.
- inform us in writing your new address within 1 month upon the change of your address
This enables you to receive all tax returns and assessment notices issued by the IRD in good time.
For further information, please approach our Collection Enforcement Section. Details are as follows:
7/F (For corporations, partnerships and leaving Hong Kong cases)
& 6/F (For Individuals),
5 Gloucester Road, Wan Chai,
Monday to Friday: 8:15 am to 12:30 pm & 1:30 pm to 5:30 pm
2594 3210 (7/F)
183 5312 (6/F)