Embed Size (px)
Citation preview
Recent changes to Hong Kong’s immigration policy on talent - the practical aspects
www.pwcias.com
In detailMandatory Provident Fund (MPF)
According to the Hong Kong Mandatory Provident Fund Schemes Ordinance (“MPFSO”), individuals from overseas entering Hong Kong for employment for not more than 13 months or covered by overseas retirement schemes are
exempted from joining a MPF schemei. The validity of an employment visa governs the eligibility for exemption whereas the actual number of days that an individual is present in Hong Kong is irrelevant. This exemption is not applicable to persons staying in Hong Kong on strength of residence visas such as dependant and QMAS visasii.
August 2015 In briefEffective May 2015, the Hong Kong Immigration Department (“ImmD”) has implemented a series of enhancement measures to the existing admission schemes including General Employment Policy (GEP), the Admission Scheme for Mainland Talents and Professionals (ASMPT), and Quality Migrant Admission Scheme (QMAS) and introduced a new scheme, Admission Scheme for the Second Generation of Chinese Hong Kong Permanent Residents (ASSG) to attract non-local talents to Hong Kong. Apart from the changes in the requirements and application processes, there are also corresponding impacts on how employers manage their human resources. We would highlight the practical implications brought by these enhancement measures to employers and employees in this newsletter.
2 PwC
Starting from May 2015, the maximum period granted for an employment entry visa has been relaxed from 12 months to 24 months (or subject to the duration of the employment contract or passport validity, whichever is shorter). Assuming an employee is granted an employment entry visa for 24 months and is not covered by any overseas retirement schemes, the employer will be required to enrol the employee into a MPF scheme within the first 60 days of employment in Hong Kong as if he/she was a local employee. This situation may be applicable to non-local fresh graduates who do not have any prior working experience to be covered under any overseas retirement schemes. Thus, employers are recommended to review the situations of their foreign employees and enrol non-exempted individuals into the MPF system timely in order to avoid any costly mistakes.
Contract terms
Even though the stay pattern for entrants under GEP or ASMTP has been relaxed from 1-2-2-3 years to 2-3-3 years, employers should bear in mind at the time of drafting or reviewing contract terms that the visa validity is limited to duration of the employment/ assignment contract if it is shorter.
Individual tax filing positions
Individuals who have stayed in Hong Kong on employment condition (via GEP or ASMTP) for not less than 24 months and have an assessable income for Hong Kong salaries tax of not less than HK$2 million in the previous year of tax assessment can apply for visa extension under the top-tier stream, which provides for a 6-year extended visa (on time limitation only) upon approval. Eligible applicants should submit proof, such as salaries tax assessment issued by the Hong Kong Inland Revenue Department (“IRD”), to substantiate their level of income. It is our understanding that the practical interpretation of “assessable income” from an immigration perspective may be referred to the net income of an individual after taking into account of any income exemption claims. For example, if an applicant has made a time-apportionment claim in his/her Hong Kong individual tax return under which his/her “assessable income” is reduced below HK$2 million, he/she may not qualify for the top-tier stream. Thus, both employers and employees who wish to apply for visa extension under the top-tier stream should take note of this requirement in order to avoid any misunderstanding on expected results as well as delay in the application process.
Illustrative examples on top-tier stream
For GEP or ASMTP entrants already admitted to Hong Kong, they may submit an application for extension of stay under the top-tier stream within 4 weeks before their limit of stay expires. If an individual is not qualified upon instant application but is able to meet the requirements subsequently, he/she may apply for the extension of stay under the top-tier stream at any time thereafter.
We set out the following scenarios to illustrate the related logistics:
Scenario 1
Mr. A activated his employment visa in December 2014. His assessable income showing in the 2014/15 Notice of Assessment is less than HK$2 million.
In December 2015, when his entry visa expires, he should be granted a 3-year extended visa upon approval. He does not qualify for the top tier stream because he has worked in Hong Kong for less than 24 months and his assessment income for 2014/15 is less than HK$2 million.
Scenario 2
Mr. B activated his employment visa in December 2013. He handled his first visa extension in December 2014 and his employment visa was extended to December 2015.
In December 2015, when he applies for his second visa extension, he has assessable income of not less than HK$2 million showing in the 2014/15 Notice of Assessment. He shall be able to meet the top-tier entrant requirements i.e. has been permitted to take up employment for not less than 24 months and has assessable income of not less than HK$2 million in the previous year of assessment. He shall then be granted a 6-year extended visa upon approval.
PwC 3
Scenario 3
Ms. C activated her employment visa in December 2014. Even if she has assessable income of not less than HK$2 million for the tax year of 2014/15, she will not qualify for the top-tier stream upon application for extension of stay in December 2015 on the basis that her duration of stay in Hong Kong on employment condition is only up to 12 months at the time of applying for the visa extension. Consequently, Ms. C should be granted a 3-year extended visa upon approval.
In September 2016, Ms. C receives 2015/16 Notice of Assessment showing her assessable income is more than HK$2 million. In December 2016, Ms. C’s duration of stay in Hong Kong reaches 24 months and she should then be qualified as a top-tier entrant. Hence, instead of waiting until the expiry of visa extension (i.e. December 2018), she can apply for top-tier stream in December 2016 and should be granted a 6-year visa (on time limitation only) upon approval.
Recruitment and retention
Persons permitted to stay on strength of employment visa are required to seek prior approval from the ImmD for any change of employment. However, successful top-tier entrants now only need to notify the ImmD for their change of employment. It simplifies the hiring processing from the employers’ end and so saves time and cost for both employers and employees.
Successful applicants admitted via the new scheme, ASSG, are also allowed to take up employment without seeking prior approval from the ImmD. This is an additional pool of talents and professionals that employers can look for.
On the contrary, while top-tier entrants can freely switch employment or even remain unemployed in Hong Kong during the 6-year period, employers may consider reviewing their human resources policies and implementing relevant measures for retention of talents. Commonly used retention tools include, but not limited to, equity-based remuneration schemes or retirement benefit benefits with vesting features that encourage longer period of employment, differentiation between “bad leaver” vs “good leaver” which governs entitlement to severance/separation payments. It is suggested to obtain professional advice in understanding the respective implications before any measures are implemented.
PwC observations
While the ImmD has introduced various enhancement measures to its immigration policy, other relevant implications mentioned above may not be obvious to employers and employees. For example, individual tax filing positions now affect individuals’ eligibilities to apply for extensions of stay under the top-tier stream. Certain type of non-local employees who used to be qualified as exempted persons may need to be enrolled into the MPF system as if they were local employees. In fact, immigration, tax, social security, and other mobility issues are often inter-related in managing international assignments. Comprehensive analyses should be performed in advance so that employers and employees can make appropriate informed decisions.
i. Section 4(3) of the Mandatory Provident Fund Schemes Ordinance (“MPFSO”) and Section 203 of the Mandatory Provident Fund Schemes (General) Regulation
ii. IV.15 Guidelines on Person Exempt under Section 4(3) of the MPFSO
The information contained in this publication is of a general nature only. It is not meant to be comprehensive and does not constitute the rendering of legal, tax or other professional advice or service by PwC International Assignment Services Holding Pte Ltd. (“PwC”) or any other entity within the PwC network. PwC has no obligation to update the information as law and practices change. The application and impact of laws can vary widely based on the specific facts involved. Before taking any action, please ensure that you obtain advice specific to your circumstances from your usual PwC client service team or your other advisers.
The materials contained in this publication were assembled in August 2015 and were based on information available at that time.
© 2015 PwC International Assignment Services Holding Pte Ltd. All rights reserved. In this publication, PwC refers to PwC International Assignment Services Holding Pte Ltd, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. HK-20150812-4-C1
Your International Assignment Services contacts
Our International Assignment Services team offers comprehensive solutions that help clients maximise business value frominternational assignments–bringing organisations to the leading edge of business performance. We specialise in international assignments management, expatriate tax compliance and advisory, tax & assignment policy review and design, regional health check, expatriate compensation and benefits design and immigration services.
If you would like to receive further information or seek professional assistance on the issues above, please contact:
Mandy Kwok
Managing Partner - Asia +852 2289 3900 [email protected]
Bruce Lee
Director +852 2289 5510 [email protected]
Global Mobility Services
