According to the Mandatory Provident Fund Schemes Ordinance (hereinafter referred to as the Mandatory Provident Fund Ordinance), every employee working in Hong Kong must participate in the Mandatory Provident Fund Scheme. Sexual Contributions. Although you may already have a certain level of understanding of MPF schemes, the rising proportion of start-ups and slashers in Hong Kong in recent years has made many people pay more attention to MPF matters for self-employed persons. How should self-employed persons participate in and calculate MPF? Please refer to the following:
How can a self-employed person join an MPF scheme?
If you are an employee with an employee contract, basically your MPF scheme will be assisted by the company to establish an MPF account. If you are an employee who has opened an account, you only need to provide the previous MPF account number and identification documents to integrate the account. The company usually also supports contacting the MPF scheme trustee, which is relatively convenient.
However, the self-employed are not comparable. Based on the provisions of the MPF Ordinance, all self-employed persons aged 18 to 64 must join an MPF scheme, and they are obliged to contact the MPF scheme trustee on their own initiative to arrange relevant contributions.
During the process, self-employed people need to fill in the relevant forms of MPF, and with the assistance of the trustee, indicate information such as investment portfolio, income and contribution cycle, monthly contribution amount, etc., and finally confirm the content of the agreement and sign it.
How to calculate MPF contributions for self-employed persons?
The income of self-employed persons can be calculated by the following methods:
• Refer to the “Assessable Profits” of the Inland Revenue Department on the Notice of Assessment;
• With reference to the basic allowance as defined in the Inland Revenue Ordinance;
• make an income statement to the trustee;
• Use the highest relevant income level for each year as the relevant income.
Regarding to the important question, are the MPF mandatory contributions for self-employed persons the same as for general employees? Yes, both contribute 5% of monthly income, subject to maximum and minimum income restrictions:
Monthly income (annual income) less than $7,100 ($85,200) – no contribution required
Monthly income (annual income) between $7,100 – $30,000 ($85,200 – $360,000) – relevant income x 5%
Monthly income (annual income) above $30,000 ($360,000) – $1,500 per month or $18,000 per year
For example, if the average monthly income of a self-employed person is $18,000, the actual mandatory MPF contribution amount is $18,000 x 5% = $900; once the average monthly income of a self-employed person exceeds $30,000, the maximum contribution amount is only $1,500.
However, self-employed persons can choose to add additional voluntary contributions on top of the mandatory contributions if they wish.
How do self-employed persons of limited company, unlimited company, sole proprietorship contribute?
Under the MPF Ordinance, special attention should be paid to self-employed persons with limited companies and unlimited companies, who may be required to make contributions according to the Ordinance:
• Self-employed persons with unlimited companies: Those with small team size are generally regarded as self-employed persons under the MPF Ordinance, and both sole proprietorships and partnerships are required to make mandatory contributions.
• Self-employed persons of limited companies: If the proprietor receives company salary, he/she must participate in MPF contributions, but if he has no actual position, such as non-executive directors, he/she does not need to participate in MPF contributions.
• Self-employed persons in sole proprietorship companies: basically the same as freelance workers, “pay themselves to themselves” and need to make contributions according to regulations.