How do I account for payroll and MPF contributions in Hong Kong?
Employer and employee each contribute 5% of relevant income to an MPF scheme, within a minimum and maximum income band. Record gross salary as an expense, the employee's MPF as a deduction owed to the trustee, and the employer's MPF as an additional expense. Do this each pay period and clear it when paid.
Rates (MPFA). For regular employees, the employer and the employee each pay 5% of relevant income, within a band. Monthly-paid staff: no employee contribution below HK$7,100 (the employer still pays 5%), and a cap of HK$1,500 each on income above HK$30,000. For example, on HK$20,000 monthly pay each side pays HK$1,000; on HK$50,000 each pays HK$1,500.
Journal entries each payroll
- Debit salary expense (gross pay) and MPF employer expense.
- Credit net salary payable (or bank), MPF payable (employee plus employer portions) and any other deductions.
- When you pay the trustee, debit MPF payable and credit bank.
Other points
- Employees need not contribute for their first 30 days of employment, but the employer must contribute from day one.
- The tax tie-in: employers report pay in the annual employer's return (IR56B), filed within one month of the IRD's April issue.
Keep payroll registers, payslips and MPF records with the books for seven years. See our other answers for the contribution deadline and the min/max levels in detail.
Legal basis
- Mandatory Provident Fund Schemes Ordinance (Cap. 485)
Sources
Applies to 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- Is a Hong Kong company legally required to keep accounting records?Yes. Section 373 of the Companies Ordinance (Cap. 622) requires every company to keep accounting records that explain its transactions and show its financial position and performance at any time. Directors who fail to take all reasonable steps risk a fine of HK$300,000, and up to 12 months' jail if the failure is wilful.
- How long must a Hong Kong company keep its accounting records?Seven years. Under section 377 of the Companies Ordinance, a company must keep its accounting records for 7 years after the end of the financial year to which the last entry relates. The Inland Revenue Department separately requires business records to be kept at least 7 years after the transactions they relate to.
- What does section 51C of the Inland Revenue Ordinance require from my business?Anyone carrying on a trade, profession or business in Hong Kong must keep enough records, in English or Chinese, to work out assessable profits, and keep them for at least 7 years. Failing to do so without reasonable excuse can lead to a fine of up to HK$100,000.
- Which documents should a Hong Kong business keep for its books?Keep every document that supports an entry in your books: sales and purchase invoices, receipts, bank statements, contracts, payroll and MPF records, asset purchase papers, loan agreements, and stocktake sheets. The test is whether someone else could trace any figure back to its source.
- Can a Hong Kong company keep its accounting records digitally or scan paper originals?Yes. The Companies Ordinance allows records in hard copy or electronic form, provided they stay available for reference and can be reproduced on paper. The IRD also accepts electronic books and scanned source documents if integrity, legibility and origin details are preserved, and no prior approval is needed.