Hong Kong's Top Earners

Hong Kong's top-earning executive paid $45 million in salary tax for the last financial year - $4 million more than the top earner the previous year.

Figures released yesterday by Inland Revenue Department revealed the top 10 earners paid between $14 million and $45 million in 2001-02.

In 2001-01 the range was $10 million to $41 million.

The department refused to name the individuals and corporations, citing privacy concerns.

But it is believed the top taxpayer is a financier who cashed in bonuses or exercised stock options.

This was in a year when Hong Kong suffered the lowest economic growth for years of just 0.1 per cent. Unemployment also hit an all-time high of 6.8 per cent.

``The amounts of tax paid by a few taxpayers were particularly high, probably because they were in receipt of incomes other than salaries,'' a tax office spokesman said.

``Bonuses, allowances and share-option gains also form part of the assessable income of a taxpayer.''

Ernst & Young tax services partner Agnes Chan said: ``Companies will issue stock options to retain the valuable staff. Top earners might have exercised their stock options, so they are paying more taxes this year.'' Marcellus Wong, a partner with Andersen, said the higher taxes reflected strong income carried over from the previous fiscal year, 2000-01.

``[The] economy in the three quarters of 2000 was good and the IT bubble had not yet burst,'' he said.

``If the high-income earners exercised their stock options and sold the stocks for profit before the bust, they could expect to pay tens of millions in tax.''

But those who did not sell their stocks in time might be hit with big tax bills on the book earnings, while suffering losses as a result of lower stock prices later in 2001.

Hutchison Whampoa Limited group managing director Canning Fok Kin-ning, who also holds top posts at Cheung Kong (Holdings) Limited, Hongkong Electric and others, is estimated to have earned more than $135 million in the 2000-01 financial year, according to Capital, a Chinese-language monthly business magazine.

While Pacific Century CyberWorks deputy chairman Francis Yuen made $100 million, George Magnus, deputy chairman of Cheung Kong (Holdings), as well as deputy chairman of Cheung Kong Infrastructure and chairman of Hong Kong Electric, came third with an annual income of $78.5 million, the magazine reported.

These top executives' employers may well be the top 10 profit tax payers, who forked out between $450 million and $1.39 billion. The second highest profit tax payer forked out $1.05 billion.

The top personal salary tax rate is 15 per cent and the corporate profit tax rate is about 16 per cent.    - by Michael Wong & Francis Lee  iMail   6 April 2002


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