2023-11-06Hong Kong Salaries Tax – Disguised Employment Arrangement
(a) |
there is an agreement; |
(b) |
the relevant person is carrying on a trade, a profession or business, or prescribed activity, is a party to the agreement; |
(c) |
services have been carried out under the agreement by the relevant individual for the relevant person or any other person; and |
(d) |
remuneration for the services has been paid or credited to:- |
(1) a corporation controlled by
i.
The relevant individual;
ii.
An associate or associates of the relevant individual; or
iii.
The relevant individual together with an associate or associates of the relevant individual;
(2)
a trustee of a trust estate under which the relevant individual or an associate or associates of the relevant individual is a beneficiary, or are beneficiaries, as the case may be, under the trust; or
(3)
a corporation controlled by such a trustee.
It is anticipated that Section 9A may affect many business arrangements that are done without a tax-avoidance purpose. To restrict its effect, the law provides that a business arrangement satisfying all the following conditions falls outside its scope:
(a) |
neither the agreement nor any related undertaking provides for any remuneration for any of those services to include or to be the provision of annual leave, passage allowance, sick leave, pension entitlements, medical payments or accommodation, or any similar benefit, or any benefit in lieu thereof; |
(b) |
the relevant individual also carries out the same or similar services for persons other than the person for whom they are carried out during the term of under the agreement or undertaking; |
(c) |
the performance by the relevant individual of any of those services is not subject to any control or supervision which is usual under an employment relationship; |
(d) |
the remuneration is not paid or credited periodically and calculated on a basis commonly used in relation to the payment or crediting and calculation of remuneration under a contract of employment; |
(e) |
the relevant person does not have the right to cause any of those services to be carried out in a manner, or for a reason, commonly provided for in relation to the dismissal of an employee under a contract of employment; and |
(f) |
the relevant individual is not held out to the public to be an officer or employee of the relevant person. |
- https://www.ird.gov.hk/eng/pdf/dipn25.pdf