MPF Hong Kong: Contribution Rates and Payroll Tax Guide

Hong Kong payroll looks simple on paper, until you get to the Mandatory Provident Fund (MPF).

There’s no separate payroll tax in the region, so it’s easy to assume the rest is straightforward. But employers still have to make mandatory monthly contributions to MPF, Hong Kong’s compulsory retirement savings scheme, for eligible staff. And calculating those contributions involves more than applying a flat percentage to each paycheck.

Caps and exemptions affect the amount, and only certain types of earnings count toward it. The rules around severance and long-service payments have shifted, too. And day-to-day administration has changed with the introduction of eMPF.

MPF becomes manageable once you see how the pieces fit together. Here’s how MPF Hong Kong rules work and what they mean for your payroll.

What is MPF, and how does it work in Hong Kong?

MPF is Hong Kong’s employment-based retirement savings system. It was introduced in December 2000 to help people build long-term savings during their working years.

Think of it as a retirement account that follows an employee from job to job. Employers put money into it, employees also usually contribute, and the money is invested in funds the employee chooses. They can pick from equity and bond funds, mixed funds, and more conservative options.

The Hong Kong MPF system has a government regulator, but the government doesn’t hold the money. The Mandatory Provident Fund Schemes Authority (MPFA) oversees the system, while approved private trustees manage the schemes and employee accounts.

That’s why MPF isn’t a tax or a government pension. Instead of going into general government revenue, contributions stay in the employee’s MPF account and grow through investment returns. In most cases, employees can access that money when they reach the retirement age of 65, with early withdrawal allowed in specific situations like permanent departure from Hong Kong or terminal illness.

For employers, the first step is to figure out whether a new hire needs an MPF account.

Generally, employees aged 18 to 64 who are employed for 60 days or more need to join a scheme. You have the first 60 days of employment to enroll them. The rule covers both full-time and part-time workers, while self-employed people must join an MPF scheme themselves.

There’s one important exception: Casual workers in the construction and catering industries must join from day one, even if they only work for a single day.

And some workers don’t need MPF at all. Key exemptions include:

• Workers outside the age range. Employees under 18 or aged 65 and above don’t need to join.
• Domestic employees. This includes domestic helpers who work in their employer’s home.
• Some overseas employees. Employees who come to Hong Kong on an employment visa for 13 months or less are exempt. The same applies to employees who are members of a retirement scheme outside Hong Kong, and the overseas scheme doesn’t need MPFA approval.
• Members of other statutory or exempted schemes. This includes civil servants, subsidized or grant-school teachers, and employees covered by an occupational retirement scheme with an MPF exemption certificate.

How eMPF changes the payroll process

MPF used to mean dealing with different trustees and their paperwork. eMPF brings that process into one place.

This one-stop digital platform was launched in June 2024 and now covers all MPF schemes. Employers can handle enrollment and contributions in a single system, instead of switching between different trustee portals.

eMPF also pre-fills contribution details and calculates the amounts due. That cuts down on repetitive payroll work and makes monthly MPF administration easier, especially when you’re managing contributions for several employees.

MPF contribution rates and income thresholds

Hong Kong doesn’t have a separate payroll tax for employers. But there’s one mandatory payroll cost employers should budget for: MPF.

Hong Kong’s MPF contribution rates haven’t changed for 2026. You and your employee generally contribute 5% of the employee’s relevant income, subject to the minimum and maximum income levels set by law.

But before calculating contributions, know which parts of an employee’s pay count as relevant income. Leave pay, commissions, discretionary bonuses, and cash allowances are included. Severance, long-service payments, and expense reimbursements aren’t.

Contributions are based on MPF’s fixed rates and income thresholds:

Source: Mandatory Provident Fund Schemes Authority

Here’s how that works in practice.

If an employee’s relevant income falls below HK$7,100 per month, they don’t contribute. You still pay your share, based on what the employee earns. Once their relevant income passes the maximum, contributions hit the ceiling. Anything above HK$30,000 per month doesn’t increase the mandatory amount for either side.

Within the main band, both employer and employee contribute the same percentage. You deduct the employee’s share from their pay, add your own contribution, then send both to eMPF. You can contribute more if your benefits package includes voluntary MPF contributions, but anything above the mandatory amount is optional.

And don’t forget the deadline. For monthly-paid employees, contributions are due by the 10th day of the following month. New employees don’t contribute for their first 30 days, but employer contributions begin from their first day.

One thing worth watching: The income thresholds haven’t changed since 2014. But if the maximum goes up, the cap on mandatory contributions rises with it. So, always check the MPFA’s latest figures before setting the payroll budget.

The abolition of MPF offsetting: What it means for employers

For years, employers in Hong Kong could use their MPF contributions to offset an employee’s severance or long-service payment when those payments became due.

That changed on May 1, 2025 (the transition date). Starting from the transition date, employers can’t use mandatory MPF contributions to reduce payments tied to service earned on or after May 1, 2025.

But offsetting isn’t entirely gone. Accrued benefits from your voluntary MPF contributions can still be used for offsetting, as can gratuities based on length of service.

What if an employee joined before May 1, 2025?

If an employee joined before the transition date, their severance or long-service payment is split into two parts:

• Service before May 1, 2025. You can still use benefits from your MPF contributions, mandatory or voluntary, to offset this portion.
• Service from May 1, 2025, onward. You can’t use benefits from your mandatory contributions to offset this portion.

The pre-transition portion is fixed based on the employee’s wages and years of service as of May 1, 2025.

How the split works in practice

Say an employee joined your company in 2020 and becomes entitled to a long-service payment in 2030.

You can use benefits from your MPF contributions to offset the part of the payment linked to their service from 2020 through April 2025. For the part tied to their service from May 2025 through 2030, your mandatory contributions are off the table.

So the longer an employee stays after the transition date, the more of the eventual payment will fall under the new rules.

What about the government subsidy?

The government introduced a subsidy scheme to help employers adjust to the change. For eligible employers, it covers part of the cost of the post-transition portion of severance and long-service payments for 25 years, ending on April 30, 2050.

The subsidy reduces the cost for employers, but you still have to cover the remaining amount. If you have employees who may become eligible for these payments, make sure to factor this future cost into your workforce budget now.

How Pebl simplifies MPF and payroll compliance in Hong Kong

MPF isn’t a one-time setup. New hires need to be enrolled on time, and every payroll run needs contributions calculated on the right income and paid through eMPF by the deadline. You must also maintain payroll records and keep up with statutory changes—like the MPF income thresholds currently under review.

If you already have an entity in Hong Kong, Pebl’s Global Payroll handles all of this for you. We manage pay calculations, MPF contributions, payments, and reporting in one platform. You get real-time visibility across your whole team, whether they’re in Hong Kong or spread across several markets.

If you don’t have a Hong Kong entity, Pebl’s Employer of Record lets you hire in Hong Kong without setting up a local company. Pebl becomes the legal employer and takes care of payroll, MPF, and all local employment requirements.

And when you need to check a local rule, Pebl’s AI assistant Alfie provides country-specific guidance on demand. It’s useful for quick compliance questions, but major legal and tax decisions still call for professional advice.

Contact Pebl to run compliant payroll in Hong Kong.