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Payroll & Tax in Hong Kong

Hong Kong payroll & taxation

Employment in Hong Kong is said to be less regulated than it is in many other jurisdictions such as the European Union and the United States, but running a payroll will still require attention to local laws and statutory requirements for both foreign nationals and Hong Kong residents.

The primary concerns for a foreign company that needs to comply with tax laws in Hong Kong are: individual income tax (IIT) for employees, social security costs, pension contributions, payroll tax, sales tax, withholding tax, business tax and permanent establishment concerns.

Your Payroll Options in Hong Kong

Remote Payroll

A remote payroll in Hong Kong is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Hong Kong. One option for a non-resident company to payroll its employees (local and foreign) in Hong Kong is to use a fully outsourced service like a GEO, which will employ and payroll the staff on their behalf.

Local Payroll Administration

In some cases, a company will register their business in Hong Kong under one of the forms available, but prefer to have another company administer its payroll.  This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll

Larger companies with a commitment to Hong Kong may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Hong Kong payroll, and can fulfill all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Hong Kong employment laws.

Fully Outsourced Payroll & Employment

Companies can outsource the employment and payroll of their staff in Hong Kong to a GEO, like Shield GEO. This is possible for both foreign workers and Hong Kong nationals. This is the easiest, fastest and safest way to payroll staff in Hong Kong.

Shield GEO manages all aspects of payroll for workers in Hong Kong, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in Hong Kong

Information Explanation
Currency ?

HKD

Tax Figures

Information Explanation
Corporate Income Tax ?

16.5% for Hong Kong sourced profits from business carried out in Hong Kong.

Income Tax Rate ?
Grossed income Tax Rate (%)
HKD 0-40,000 2%
HKD 40,001 - 80,000 7%
HKD 80,001 - 120,000 12%
HKD 120,001 + 17%

Expats are able to offset their taxable income with relevant business expenses. More info at KPMG here

Payroll Tax ?

N/A

Sales Tax ?

N/A

Withholding Tax ?

N/A

Employee Social Security (EE SS)

Employee MPF (Mandatory Provident Fund) is 5% of gross income calculated on a max of HKD 30,000 per month

Employer Social Security (ER SS)

Employer MPF (Mandatory Provident Fund) is 5% of gross income calculated on a max of HKD 30,000 per month

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