Purpose

Introduction

Levy Regimes

Parties Responsible for Paying Construction Industry Levy

Procedures

Forms for Notices

Surcharge for Failure to Give Notices

Penalty for Late Payment

Objections and Appeals

Purpose

• These guidelines aim to help readers understand the procedures for assessment and collection of construction industry levy (CIL) by the Construction Industry Council (CIC) in accordance with the provisions of the CIC Ordinance (CICO) (Cap 587).



• Since these guidelines are NOT intended to be comprehensive, readers should refer to the CICO where appropriate. Furthermore, while efforts have been made to ensure accuracy, the provisions of CICO should prevail should there be discrepancies between CICO and the guidelines.

Introduction

• Before the amalgamation of CIC and the former Construction Industry Training Authority (CITA) on 1 January 2008, a levy, known as CIL, was collected by CITA under the provisions of the Industrial Training (Construction Industry) Ordinance (Cap 317) (ITCIO) on construction operations carried out in Hong Kong. Upon the amalgamation, CITA was dissolved and ITCIO was repealed. Henceforth CIL is collected by CIC in accordance with the provisions of CICO.



• However, by virtue of section 83 of the CICO, the levy mechanism in ITCIO will still apply to the following types of construction operations with the powers conferred and the functions imposed on CITA under ITCIO being exercised and performed by CIC –

(a) construction operations the tender for which had been submitted to the employer before 1 January 2008;

(b) other construction operations carried out under a construction contract, if the contract had been entered into before 1 January 2008 or the construction operations had commenced before 1 January 2008; and

(c) construction operations other than those referred to in (a) and (b), that had commenced before 1 January 2008.

• The levy mechanism in CICO will apply to construction operations not covered by (a) to (c) above.



• For the sake of simplicity, construction operations subject to the ITCIO mechanism will be referred to as "construction operations tendered before 1 January 2008" while construction operations subject to the CICO mechanism will be referred to as "construction operations tendered on or after 1 January 2008".



• The contents of the following sections apply to the levy mechanisms in both ITCIO and CICO given the similarities in the procedures prescribed in the two ordinances.

Levy Regimes

• As a result of the provisions of section 83 of CICO and the evolution of the provisions of ITCIO over the years, construction operations are subject to the following levy regimes –

[1] Construction Works or Construction Operations with total value not exceeding the levy threshold will not be liable to CIL.

[2] CWRO - Construction Workers Registration Ordinance (Cap 583). The levy under CWRO is collected on behalf of the Construction Workers Registration Authority by CIC in its capacity as Registrar under the CWRO.

Parties Responsible for Paying CIL

• Levy will have to be paid by contractors of construction operations which are liable to CIL.

Procedures

• Notice of commencement

The contractor and the authorized person of a construction operation are each required to inform CIC that they are the contractor and authorized person of the operation through a notice of commencement to be given within 14 days after the commencement of the operation.

• Notice of payment

The contractor is also required to give notice of payment within 14 days after a payment is received in respect of any stage or part of the construction. (For a term contract, the notice is required to be given within 14 days after the last day of the month in which the payment was made.)

• Notice of completion

The contractor and the authorized person are each required to give notice of completion within 14 days after completion of the construction operation.

• Assessment of levy by CIC

CIC will assess the amount of the levy payable upon receipt of a notice of payment.

• Notice of assessment

The amount of levy payable will be specified on a notice of assessment, which will be issued to the contractor.

• Payment of levy

The contractor has to pay the amount within 28 days after he receives the notice of assessment.

Forms for Notices

• CIC has prescribed the following standard forms for giving notices of commencement, payment and completion -

Surcharge for Failure to Give Notices

• CIC may impose a surcharge on the contractor who fails to give a notice of payment or notice of completion without a reasonable excuse. The rate of surcharge depends on how late the notifications are made, subject to a maximum of 200% of the levy payable.

Penalty for Late Payment

• If the amount of the levy or surcharge is not fully paid within 28 days after the contractor receives the notice of assessment or notice of surcharge, a penalty of 5% of the unpaid amount will be imposed. If the amount of the levy or surcharge, including any penalty imposed, remains unpaid within 3 months after the expiry of the specified period of 28 days, a further penalty of 5% of the unpaid amount will be imposed.

Objections and Appeals

• A contractor may object to the levy or surcharge imposed. The objection has to be made in writing using the prescribed form, and has to be served on the Council within 21 days after the contractor receives the notice of assessment or the notice of surcharge, as the case may be.



• The objection will be forwarded to the Objections Committee of CIC for consideration.



• An objector who is aggrieved by a decision of the Objection Committee may appeal to the District Court against that decision.



• The contractor has to pay the levy or surcharge, penalty or further penalty first, even though he intends to make an objection.