Creating and maintaining payroll in Hong Kong
Hong Kong is a renowned global trade hub. With accessible Westernized culture, proximity to mainland China and other parts of Asia, and an accommodating business environment, it’s no surprise that many foreign companies are drawn to the bustling economic area. When expanding into Hong Kong, many organizations look to recruit locally.
While this is an excellent way to access local talent and establish a foothold in the region, it also requires adherence to the complex labor and payroll regulations, which are detailed in the Employment Ordinance.
A popular way to bypass the confusion and complexity is to begin utilizing Hong Kong payroll outsourcing for your payroll setup and management. At Horizons, we specialize in facilitating global expansion and provide comprehensive Hong Kong payroll outsourcing, whether you have an established entity in the region or not.
Why choose the Horizons payroll solution?
If you have an entity
If you haven’t set up a legal entity in Hong Kong, we can provide a fully comprehensive Hong Kong payroll outsourcing service and utilize our Hong Kong subsidiary to act as your employer of record. Get all the benefits of hiring locally but bypass the complex setup and management associated with it. This service is perfect for any organization interested in expanding to Hong Kong flexibly and with low risk.
If you don’t have an entity
If you have already established an entity in Hong Kong, we provide full end-to-end outsourcing solutions to find, hire, and manage payroll administration for local staff, in full compliance with Hong Kong laws. This service is ideal for companies already established in-country who want to simplify the process of Hong Kong payroll outsourcing for their international operations.
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Hong Kong payroll guide
What are the payroll tax and withholdings rules in Hong Kong?
Hong Kong’s taxes and withholdings procedures are distinct from mainland China’s. The region operates a progressive tax system with higher earners paying a larger proportion of their income in taxes. The income tax rate ranges from 2% up to 17%, depending on income level.
Employers are not required to withhold income tax, and employees file their own taxes each year instead. Corporate tax is set at 16.5%.
Generally, both employees and their employers must add to the Mandatory Provident Fund (MPF), a type of pension fund, and employees are auto-enrolled after 60 days of employment. The level of contributions depends on the length of employment and income level, but is usually at least 5%.
| Mandatory Provident Fund (less than HK$7,100) | 5.0% |
| Mandatory Provident Fund (lHK$7,100 – 30,000) | 5.0% |
| Mandatory Provident Fund (lHK$30,000 +) | HK$ 1,500 Max |
| Total Employer Cost | 5.0% |
| Mandatory Provident Fund (less than HK$7,000) | 0.0% |
| Mandatory Provident Fund (lHK$7,100 – 30,000) | 5.0% |
| Mandatory Provident Fund (lHK$30,000 +) | HK$ 1,500 Max |
| Total Employee Cost | 5.0% |
| Up to 50,000 | 2.0% |
| 50,000-100,000 | 6.0% |
| 100,000-150,000 | 10.0% |
| 150,000-200,000 | 14.0% |
| Over 200,000 | 17.0% |
Contractual rights and termination rules
All employees in Hong Kong have certain mandatory entitlement and termination terms, which need to be stipulated in a formal contract of employment. Regarding termination, employers can determine a notice period of no less than seven days in the contract, or use a default period of 30 days.
Various other entitlements must be provided by law for all employees. This includes statutory rest days, national holidays, paid annual leave (dependent on the length of employment), among others.
How to establish Hong Kong payroll outsourcing
Initially, you are legally required to register within one month with the Inland Revenue Department (IRD). The department will provide details of your taxation and enforce tax collection. Additionally, you are required to provide an employer’s tax return annually.
Specific forms are also required for certain employment procedures. These include the IR566 for new hires (submitted within three months of employment), the IR56G for employees leaving Hong Kong for more than a short time, and the IR56F for terminations of employment.
Alternatively, you utilize Hong Kong payroll outsourcing for the entirety of your payroll management, and associated administration to Horizons’ payroll experts. Additionally, we can provide our in-country subsidiary to act as employer of record for your hires, so you can benefit from our outsourcing services even if you don’t have an entity in Hong Kong.
Manage payroll in Hong Kong
Whether it’s EOR service or just payroll management, Horizons’ employment experts can help you get started in 24h.
