Hong Kong Employer Obligations

A Hong Kong MPF employer must contribute 5% of each employee's relevant income, up to HK$1,500 a month per employee, and the employee contributes 5% as well. On top of MPF, the employer reports staff to the Inland Revenue Department (IRD), files the Employer's Return and keeps payroll records for at least seven years.

This guide covers registration, contribution rules, employee returns, leaver procedures, record-keeping and penalties, with a setup checklist at the end. The figures come from the Mandatory Provident Fund Schemes Authority (MPFA) and the IRD, checked on 15 October 2026. It is part of our Hong Kong business tax series.

When do an employer's tax obligations start?

According to the IRD, your tax obligations begin when you hire your first employee. From that point you owe three things: contributions to a Mandatory Provident Fund scheme, notifications and returns to the IRD, and a record of every person you pay.

For each employee, the IRD asks you to keep:

• personal details and Hong Kong identity card number;
• full-time or part-time status and job capacity;
• cash and non-cash remuneration;
• MPF contributions;
• employment contracts and amendments;
• the employment period.

Keep these records in an organised file, and tell the IRD when personal details or employment terms change. Business accounting records, including payroll records, must be kept for at least seven years.

How much must an employer pay into MPF?

Both employer and employee contribute 5% of the employee's relevant income, subject to minimum and maximum income levels. The MPFA publishes the levels.

Weekly and other periods are the daily levels multiplied by the number of days in the wage period. Three rules shape the cost.

1. Employer contributions start on day one. They are calculated from the employee's first day of work, and the employer has no contribution holiday.
2. The employee has a 30-day holiday. A new employee pays no contributions for the first 30 days, plus the rest of the incomplete wage period that follows. Casual employees have no holiday.
3. Low earners. If an employee's income is below the minimum, the employer still pays its 5% and the employee pays none.

For a monthly-paid employee earning above the cap, the employer's cost is fixed at HK$1,500 a month. Budget on that figure rather than on a percentage of total pay.

When are MPF contributions due?

The first payment is due by the next contribution day after the calendar month that contains the employee's 60th day of employment. After that, contributions for monthly-paid employees are due on the 10th day of each month and cover the previous wage period. For casual employees in a master trust scheme, the deadline is within 10 days after each contribution period ends.

If a due date falls on a Saturday, a public holiday, a gale or black rainstorm warning day, or a day when the eMPF Platform is suspended, it moves to the next working day.

Late payment can lead to surcharges and enforcement action. We do not quote the amounts, so check the MPFA's current guidance if a payment is overdue. Our guide to Hong Kong company annual compliance shows how to place MPF dates in the company calendar.

What does the employer file with the IRD?

The IRD sets out a short list of forms. Most of the trouble comes from missing a one-month or three-month deadline.

These deadlines come from the Inland Revenue Ordinance: section 52(4) for new employees and sections 52(5) and 52(6) for leavers.

Who is reported on an IR56B?

For the 2025/26 return the IRD says to report employees who are single and earn HK$132,000 or more, or who are married, part-time or directors, regardless of the amount. Give each employee a copy of the IR56 form that was issued.

Which Employer's Return deadline catches people out?

The one-month limit on the BIR56A. The IRD gives no fixed calendar date because the form is issued to you. If you have not received your return for the year by mid-April, ask the IRD for one. A return that stays on a desk past one month is late, even if the business had no staff that year.

What happens when an employee leaves?

Two situations need action before the person goes.

Termination of employment. File Form IR56F at least one month before the termination date. Do not also file an IR56B for that employee for the same year.

Departure from Hong Kong. File Form IR56G in two copies at least one month before the expected departure. From the filing until the employee obtains a letter of release from the IRD, the employer must withhold all amounts due to the employee, including salary, commission, bonuses and reimbursements. If the employee does not pay outstanding tax, the IRD can issue a recovery notice (IR113C) requiring the employer to settle the tax from the withheld money.

This is the point where employers get hurt most. Paying a leaver in full while the IR56G is outstanding can leave the company liable for the employee's tax. Make the clearance step part of every exit checklist.

What do employees pay, and why does the employer care?

Employees pay salaries tax, and the employer does not pay it for them. But the return you file feeds their assessments, so errors come back to you.

The IRD's brief guide gives the progressive rates from 2019/20 onwards on net chargeable income:

From 2024/25 the standard rate is 15% on the first HK$5,000,000 of net income and 16% on the remainder, and tax under the progressive rates cannot exceed the standard-rate amount. Employee mandatory MPF contributions are deductible up to the prescribed limit. Our guide to Hong Kong salaries tax explains the employee side in detail.

Can the company deduct employment costs?

Generally yes, if the costs are incurred to produce chargeable profits. Employer contributions to a retirement scheme are deductible, limited to 15% of an employee's total emoluments, according to the IRD brief guide. Remuneration paid to a sole proprietor or partners is not a deductible expense.

The rules for deductions, depreciation and losses are in our guide to Hong Kong tax deductions and losses.

What are the penalties for getting it wrong?

The IRD states the following consequences for tax and record failures. Amounts are statutory maximums.

• An incorrect return without reasonable excuse: a fine of HK$10,000 plus a further fine of treble the undercharged tax.
• A wilful incorrect return with intent to evade: a fine of HK$50,000, treble the undercharged tax and three years in prison.
• Failing to keep sufficient records: a fine of up to HK$100,000.
• Late payment of tax: a 5% surcharge, and a further 10% if the tax is still unpaid six months after the due date.

The IRD's employer page does not list penalty amounts for late BIR56A or IR56 forms and refers to a separate penalty policy. Check that policy before relying on a figure for a missed form.

How should a Hong Kong MPF employer set up payroll compliance?

A one-page process covers most of it.

1. Choose an MPF scheme and trustee before the first hire starts work.
2. Enrol each employee and record the start date, so the 60-day and 30-day clocks are clear.
3. Set a monthly payroll calendar with the 10th-of-the-month MPF due date.
4. File Form IR56E within three months of each hire likely to be chargeable.
5. Keep a personnel file with the contract, remuneration and MPF record.
6. Lodge the BIR56A within one month of receipt, with IR56B for each reportable employee.
7. Run an exit checklist that includes IR56F and IR56G timing and the retention of final pay where needed.
8. Archive records for seven years and know where they are.

If you do not want to run this in-house, our accounting services cover payroll support. You can also start from the LAINEXUS homepage.

What mistakes do employers make most often?

• Treating MPF as a percentage of total pay. The cap is HK1,500.
• Skipping the employer's day-one contribution. The employee's 30-day holiday does not apply to the employer.
• Ignoring the one-month BIR56A limit. It applies even with no employees.
• Paying a leaver in full before tax clearance. The IR56G withholding duty can make the company liable.
• Weak personnel files. Records must show remuneration, MPF and the employment period.
• Assuming a director is exempt. Directors are reported on the IR56B regardless of amount.

How does this link to the rest of Hong Kong business tax?

A Hong Kong MPF employer also has a tax angle: payroll is a cost line in your profits tax computation, so the employer's records feed the deduction. For the rate your profit is taxed at, read our guide to the Hong Kong corporate tax rate. For the full picture, return to the hub guide on Hong Kong business tax.

Frequently asked questions

How much must a Hong Kong employer contribute to MPF?

The employer pays 5% of the employee's relevant income, and the employee pays 5% as well. For monthly-paid staff, relevant income is counted between HK30,000, so the maximum mandatory contribution is HK$1,500 a month for each side. The employer's contribution starts from the employee's first day of work.

When does the first MPF payment fall due?

The first payment is due by the next contribution day after the calendar month that contains the employee's 60th day of employment. After that, monthly-paid employees' contributions are due on the 10th day of each month for the previous wage period. If the date falls on a holiday, it moves to the next working day.

Which IRD forms must an employer file?

Lodge the Employer's Return (BIR56A) within one month of receiving it. File Form IR56E within three months of hiring someone likely to be chargeable, IR56F one month before a termination and IR56G one month before an employee leaves Hong Kong. Report reportable employees on an IR56B with the return.

What must an employer do when an employee leaves Hong Kong?

File Form IR56G in two copies at least one month before the expected departure. Until the IRD issues a letter of release, withhold all amounts due to the employee. If the employee does not pay outstanding tax, the IRD can issue a recovery notice (IR113C) to the employer for settlement from the withheld money.

How long must payroll records be kept?

For at least seven years. The IRD requires business accounting records, including payroll records, to be retained for that period. Failing to keep sufficient records can bring a fine of up to HK$100,000. Keep contracts, remuneration, MPF records and the employment period for each employee.

This article is general information, not tax or legal advice. Rules were checked against MPFA and IRD pages on 15 October 2026 and can change. Confirm current requirements with the MPFA and the Inland Revenue Department before filing. Sources: MPFA mandatory contributions, IRD employer obligations, IRD brief guide to taxes.