The aim of this paper is to give a general overview of the comparison of Australian and Hong Kong tax systems. The purpose in doing so is to provide an understanding of two tax systems and the way in which they work. The Hong Kong tax system is generally regarded as relatively simple and favourable to the taxpayer compared to the Australia tax system which has a complex tax principle. This paper will concentrate compare those two tax system in five particular areas of tax. They include income tax, company tax, consumption tax, wealth tax and tax administration. Beside the comparison it also provides some of taxation issues that have been discussed and concerned in Hong Kong in the last 12 months. One of the issues mentions in this paper is Hong Kong’s administration has gazette the Inland Revenue (Amendment) Bill 2010 to implement two concessionary revenue measures announced in the 2010-11 budget. In additional, it also provides advices for Australian company that wants to set up a business in Hong Kong in term of tax avoidance and tax planning issues.
2. Income tax
Hong Kong operates a territorial basis of taxation under which taxes are imposed only on profits or income with a Hong Kong source. The principal direct taxes are profits tax, salaries tax and property tax. The Inland Revenue Department is responsible for taxation matters in Hong Kong . If an individual's employer is Hong Kong-resident, all the worker's employment income is taxed in Hong Kong. If an individual's employer is non-Hong Kong-resident (for example, the worker is on assignment in Hong Kong for a foreign company), employment income for services performed outside Hong Kong may be exempt from tax in Hong Kong (a so-called time basis claim) . The tax year in Hong Kong is 12 months period commencing on 1 April of each year .
In Australia the differences from Hong Kong basis of taxation are source and residence status. Residents in Australia are taxable on all sources if... [continues]
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