MPF Tax Deduction Hong Kong: How to Claim Relief on Mandatory Contributions

This article is a rewrite of a report from May 2012.

April and May are Hong Kong’s tax-filing season, and missing a single line on the return can mean leaving money on the table. The MPF tax deduction in Hong Kong turns on one phrase — “mandatory contributions”: mandatory contributions by employees and employers were deductible, while voluntary contributions were not deductible under the tax rules then in force.

How much MPF tax deduction can I claim?

Employees could deduct up to HK$12,000 a year in mandatory contributions; employers’ deductible contributions were capped at 15% of the employee’s annual salary. An employee earning HK$10,000 a month contributed HK$500 monthly — HK$6,000 a year — all of it deductible. Someone with several MPF accounts contributing HK$1,000 a month to each (HK$24,000 a year) could still only deduct HK$12,000.

MPF vs ORSO: tax treatment compared

Claiming the deduction in three steps

1. Enter total mandatory contributions for the year under “mandatory contributions to a recognised retirement scheme as an employee” on the tax return.
2. If you hold several accounts across jobs, add them up — but the deduction is capped at HK$12,000 a year in total.
3. Forgetting the entry means forfeiting the relief automatically, so double-check before filing.

Two 2012-era changes to watch: the minimum relevant income level had risen from HK$5,000 to HK$6,500 a month in November 2011, freeing employees earning HK$5,000–6,500 from mandatory contributions; the maximum relevant income level rose from HK$20,000 to HK$25,000 a month on 1 June 2012. The MPFA website and trustees’ hotlines carried the details.