TNAG-0283-FCO40-319-Exchange-of-officers-between-government-of-Hong-Kong-and-UK--1970 — Page 53

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their Hong Kary tax liability.

(

Income Tax Liability: the much

higher incidence of UK income tax would appear to raise a problem so far as your officers would be

concerned.

J

In the usual form of secondment the officer is paid by the receiving Government and pays tax only to that Government. This was the basis on

which the Political Advisers originally served; they paid Hong

Kong tax only. Their terms of service have since been changed, as

you have indicated. From HMG funds

they are now paid their Diplomatic Service salaries (and allowances appropriate to Hong Kong) and the

Hong Kong Government reimburses HMG (paying additionally a contribution in respect of the pension liability). Thus the Political Advisers are now

liable to double taxation in the

UK since HMG pays them and in Hong Kong because the income is received

by reason of employment there. The Inland Revenue has agreed ₺ grant unilateral relief for the Hong Kong tax charged; in effect

they

-

thfrefore

A double tax liability would

fall on the Hong Kong officer

serving in the FCO who was remunerated

on the same basis; his UK tax

liability would, however, be greatly in excess of his normal Hong Kong liability and unless you could find

some way of picking the former up for him his service here would be a

rather unattractive and unrewarding financial proposition. I believe you did have some such arrangement

to cater for the UK tax liability

of your staff posted to the Hong Kong

Government Office here before their

exemption from UK tax was agreed with

the Inland Revenue.

/These