By Gary Tok,
Group Chief Commercial Officer, Tricor Group
Hong Kong Special Administrative Region of the People's Republic of China (“HKSAR”) is Asia’s premier financial hub. The vibrant city has consistently been voted as the world’s most competitive economy and one of the easiest places to do business. It has a free and fair business environment, with world-class infrastructure, that reaches the highest international standards.
In general, government approval is generally not required for foreigners to establish business and 100% foreign ownership is permitted. There is an exception for banks and other financial institutions and licence entities which require approval from the Hong Kong Monetary Authority (“HKMA”) and/or Securities and Futures Commission (“SFC”) and obtain certain special licenses.
Hong Kong has a schedular system of income tax on a territorial basis, charges income from an office, an employment or a pension to salaries tax. At present, Hong Kong does not impose any estate duty, turnover, sales, value-added, gift or capital gain taxes.
The tax year for Hong Kong runs from 1st April to 31st March.
All companies incorporated in Hong Kong are required to keep proper records for each employee’s wage and employment history, and all accounting and payroll records must be kept for at least seven years.
Minimum Wage
Hong Kong established a Statutory Minimum Wage in May 2011. Since 1 May 2019, the Statutory Minimum Wage is HK$37.5 per hour since 1 May 2019.
Compensation and Benefits
In Hong Kong, the Employment Ordinance provides the framework for a comprehensive code of employment under continuous contract of employment. The ordinance provides eligible employees with various benefits and protection such as rest days, paid statutory holidays, paid annual leave, sickness allowance, paid paternity leave, maternity protection and employment protection.
In addition to the ordinance, the company may have other different company policies, providing additional compensation, benefits and guidelines to employees.
Below are some highlights on statutory benefits and entitlements under Hong Kong employment ordinances:
Hours of Work
There is no statutory provision which prescribe minimum or maximum working hours in Hong Kong. Usual working hours for office employees are from 9:00am to 6:00pm on Monday to Friday. It is also common for some companies to have employees work on half day or alternative week on Saturday.
Overtime
There is no statutory provision for overtime in Hong Kong. Overtime hours and pay rates are defined in the employment contract or employee handbook.
Rest Day
No less than one rest day over a seven-day period.
Statutory Holidays
Employees are entitled to 12 paid statutory holidays and will gradually increase to 17 days by 2030.
13th Month Payment
There is no legal requirement under the Employment Ordinance for an employer to pay end of year payment, which includes bonus and double pay.
Statutory Leaves Entitlement
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Annual leave: The employee is entitled to 7 days annual leave with pay after serving every period of 12 month and will increase progressively to a maximum of 14 days according to the length of service.
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Sick leave: Paid sickness days, applicable for the sick leave taken into less than 4 consecutive days or eligible condition(s) and support by medical certificate, are accumulated at the rate of two paid sickness days for each completed month of the employee's employment during the first 12 months, and four paid sickness days for each completed month of employment thereafter with 120 days cap at any one time.
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Maternity leave: As a working mother, if the female employee has been employed under a continuous contract for not less than 40 weeks immediately before the commencement of scheduled maternity leave, the employee will eligible for 14* weeks paid maternity leave.
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Paternity Leave: Male employees with no less than 40 weeks of employment under a continuous contract, are entitled to 5 days paternity leave for the confinement of their spouse/partner.
Severance Payment and Long Service Payment
An employee employed under a continuous contract for not less than 24 months is eligible for severance payment if dismissed by reason of redundancy, fixed term employment contract expires without being renewed or is laid off. For long service payment, an employee employed under a continuous contract for not less than 5 years if dismissed, expiry without renewal fixed term employment contract , dies during employment, resigns due to medical reason with medical certificate issued by a registered medical practitioner or is aged 65 or above.
Mandatory Pension Fund and Medical Benefits
Mandatory Pension Fund
The Mandatory Provident Fund (MPF) is the statutory compulsory scheme for all employees in Hong Kong who have an employment contract of 60 days or more, and applies also to the self-employed between ages 18 and 65. There are exemption clauses for expatriates who work in Hong Kong for periods shorter than 13 months, or who are covered by home country's pension scheme.
Employees who are employed for less than 60 days, excluding casual employees, are also exempt from joining an MPF scheme.
An employee and employer are both required to contribute 5% per cent of the employee’s relevant income (includes wages, salary, leave pay, fee, commissions, bonuses, gratuity, perquisites, or allowances expressed in monetary terms, paid or payable by an employer (directly or indirectly) to the employee, but does not include severance payment or long service payments under the Employment Ordinance) as mandatory contributions for and in respect of the employee to an MPF scheme, subject to a maximum relevant income level for contribution purposes (currently, $30,000 per month or $1,000 per day). An employee whose income is less than the minimum level of relevant income (currently, $7,100 per month or $280 per day) is not required to contribute. However, the employer is still required to make mandatory contributions.
Medical and Life Insurance
Although it is common for employers to provide medical benefits to employees in Hong Kong, the medical and related insurance benefits are an optional benefits scheme in Hong Kong employment.
Salaries Income Tax
Salaries Income Tax
In Hong Kong, the salaries tax is charged at the lower of net assessable income, less concessionary deductions at the standard rate (for 2021/22) of 15 percent or net assessable income, less concessionary deductions and personal allowances, charged at the following progressive rates.
Tax return filing due date
In general, the tax return is due within 1 month of the date of issue by the Inland Revenue Department.
Salaries tax payment due date.
The taxpayer (employee) provisional tax is payable in 2 instalments, one of 75 percent in the last quarter of the year of assessment and the remaining 25 percent shortly after the end of the year of assessment. The provisional tax payable is typically estimated based on the income for the previous year of assessment.
The final tax for the previous year of assessment is payable at the same time as the first instalment of provisional tax.
Local employees and expatriates
The employment income of expatriates is taxed at the same tax rate as local employees. There is no special expatriate concession in Hong Kong.
Expatriates in Hong Kong
Expatriates are entitled to the same rights as Hong Kong local and/or permanent residents and are generally covered by the same tax and employment laws.
Employment and Dependent Visas
As a general rule, any person other than those who have the right of abode or right to land in Hong Kong, must obtain a visa before coming to Hong Kong for the purpose of study, taking up employment, training, investment or residence Different types of visas exist for foreign workers depending on skill level. The following are the types of visas employees may apply for taking up employment in Hong Kong:
General Employment Policy (GEP)
Admission Scheme for Mainland Talents and Professionals (ASMTP)
Technology Talent Admission Scheme (TechTAS)
Immigration Arrangements for Non-local Graduates (IANG)
About Tricor Group – Leading Business Expansion Specialist in Asia
Tricor Group (Tricor) is the leading business expansion specialist in Asia, with global knowledge and local expertise in business, corporate, investor, human resources & payroll, and corporate trust & debt services. Tricor provides the building blocks for, and catalyzes every stage of your business growth, from incorporation to IPO.
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