Starting in June, we understand that Cathay Pacific Airlines will commence withholding 30 percent of its American pilots’ salary every month. The withholding will be for US taxes and will be passed on to the US Internal Revenue Service (IRS). In addition, Cathay will remit the pilots’ personal information to the IRS so that the proper records will be maintained and tax credit given to the taxpayer-pilot. It has been reported that the move will affect about 18% of the cockpit crew.
Tax professionals in Hong Kong have queried the legal grounds for Cathay’s decision and are understandably befuddled. Some have wondered if the decision is due to the “Foreign Account Tax Compliance Act”, known as FATCA. Read more