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 don't have a local 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 have a local 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.
Horizons will help you expand in Hong Kong with confidence
Reliable delivery
We guarantee that all payments will be on time, your data will be secure, and you can be up and running within just 48 hours.
Established presence
Our in-country subsidiary will act as employer of record, offering you a presence in Hong Kong for legal local employment.
Flexible solution
Our team will manage all of the admin, payroll, HR, and taxes, so you can focus on building your business in Hong Kong.
Up-to-date compliance
We’ll ensure you stay fully compliant at all times with the laws laid out in Hong Kong’s
Employment Ordinance.
Single point of contact
Our centralized service gives you a single point of contact, simplifying the entire Hong Kong employment process.
Proven expertise
Our in-house teams of payroll and HR experts have already helped all kinds of organizations expand globally.
Hong Kong payroll tax rates & laws
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.
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Your all-in-one solution for Hong Kong payroll outsourcing and global expansion
Horizons’ Hong Kong payroll outsourcing services help your business to quickly and compliantly begin trading in Hong Kong, without the complex process of establishing a local entity and navigating local regulations. This can help your business to commence its Hong Kong operations in as little as 48 hours and has the potential to save you up to 82% in expansion costs, whether or not you have a legal entity in the country.
Horizons will manage your company’s payroll, benefits, and expenses in Hong Kong.
Additionally, we can oversee HR duties, as well as employment and tax compliance. And as the only global PEO with an in-house recruitment team, Horizons can also source, hire, and onboard your new Hong Kong workforce and set the stage for your successful expansion.
