Teachers and researchers employed in Hong Kong but working across the border could soon receive a three-year exemption from mainland taxes as part of the government’s bid to accelerate development of the Greater Bay Area.
A veteran educator said the move would encourage more Hong Kong teachers to work in private schools on the mainland that were owned by Hongkongers. He said private schools were a growing market on the mainland, especially those for early childhood.
Financial Secretary Paul Chan Mo-po, writing on his blog on Sunday, said he recently signed an agreement with Wang Jun, the commissioner of the State Taxation Administration, which would allow a qualified teacher or researcher who is employed in Hong Kong or the mainland and works on the other side to be exempted from taxes – where they work – for three years.
“I believe this measure will promote training, exchanges of talent and cooperation between the two places, and drive the development of the Guangdong-Hong Kong-Macau Greater Bay Area to become an international innovation centre,” he wrote.
Under the agreement, the relevant income will be subject to tax on the side where the person is employed.
The Greater Bay Area refers to the Chinese government’s scheme to link the cities of Hong Kong, Macau, Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing into an integrated economic and business hub.
Chan said it was the general trend for Hong Kong and the mainland to cooperate on scientific research, with the city’s tertiary institutions already opening 12 research facilities and two campuses on the mainland.
The Chinese University of Hong Kong welcomed the tax arrangement, saying it would encourage deeper collaboration and a wider range of knowledge exchanges between the mainland institutions and those in Hong Kong.
The university, which is one of two tertiary institutions with research and teaching facilities across the border, said the agreement would benefit Hong Kong’s long-term development and raise the global competitiveness of the Greater Bay Area.
It will be attractive because the cost of living is lower on the mainland
Tai Hay-lap, veteran educator
Hongkongers currently employed by Hong Kong companies, but who spend a substantial amount of time at work across the border, might be required to pay taxes on both sides.
Louis Lam, of the accounting firm PwC, said similar tax arrangements existed between places – like the US, China and some European countries – where academics need to spend time at different locations.
Tai Hay-lap, the veteran educator, said the plan could be an attractive option for local educators who teach in kindergartens, primary and secondary schools.
He said there were not many local teachers working on the mainland now, but there was a growing interest among Hongkongers and Hong Kong companies to open more private schools there.
Such schools would consider hiring Hong Kong teachers, said Tai, who is a member of the Chinese People’s Political Consultative Conference, China’s top political advisory body.
“The tax is high on the mainland, but if teachers will not be taxed for three years and these private schools offer salaries are comparable or higher than in Hong Kong, it will be attractive because the cost of living is lower on the mainland,” he said.
The proposal would come into force after ratification procedures were completed and notification by both sides, including the vetting by the Legislative Council.