In Hong Kong the tax system levies a salaries tax. Can someone explain to me how a salaries tax works compared to a “regular” income tax? Plus, I keep hearing that Hong Kong has a tax system that has worked for the last 50 years and I’m just interested in understanding how a salaries tax works as a part of their tax system.
Many countries have a payroll tax, usually linked to the welfare system.
While income tax is subtracted from salary, the payroll is added on top of the salary. Raises or breaks in payroll tax does not affect the workers’ pay check, but the employer’s workforce expenses. However, changes in payroll tax can have an indirect effect on salaries, since it affects the profit margin, and workers can claim part of that margin for their salaries.