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2)
You are right in assuming that the renumeration is subjected only to local Hong Kong income tax and not to any form of UK income tax./
3) The compensation scheme in this case would be administered by HMG, not the Hong Kong Government.
4) Compensation is envisaged for the two distinct groups of officers which you mention, but the Hong Kong Government have not yet decided whether to offer members of HMOCS a general right to retirement with full payment of the commutable part of their pension' 1997 as has been granted in previous territories. Under the compensation proposal being discussed at the moment, officers taking early retirement in 1997 would still receive the compensation instalments (paid over 5-6 years from 1997) but would not receive any interest on those instalments. Those remaining in the territory however to work under the Special Administrative Region Government would be entitled to interest at 5% per annum on the instalments. If the Hong Kong Goverment do decide to grant a general right to early retirement then this will obviously affect the number of officers remaining in the territory after 1997.
I hope that these answers are full enought to enable you to consider the case of Hong Kong HMOCS in the light of changes to the taxation law. If you need any further assistance in reaching your conclusion please do not hesitate to contact us again.
Bridget Paris
Hong Kong Department