Self-employed MPF?

Many people would prefer to work as self-employed, so they can have a more flexible working hours. Being self-employed means working more freely, and only being responsible for your own business decisions. With the emergence of more free-lancer and self-employee, how can we really distinguish whether we are working as a traditional employee or self-employee? The MPF scheme is also applicable to self-employed persons. Therefore, you are still obligated to participate in the scheme. OneStart Business Centre’s professional MPF consulting service also includes consultation for self-employees.

• Who are self-employee?

Self-employee are usually those who aged between 18 to 65, and are not working as an employee, i.e. working for yourself. Self-employed persons derive income from production of or trading in goods or services. Depending on the company structure and the business model, sole proprietors and partners in a partnership business are generally self-employed persons.

• If I am a self-employed person, who can I enroll myself in the MPF scheme?

Self-employed persons would have to enroll into the MPF scheme by establishing a MPF account with your trustee or MPF agents. You could also apply through OneStart Business Centre.

According to the Ordinance, self-employees must provide information about their relevant income and contribution basis to the trustee of their chosen scheme at least 30 days before the end of the financial year of the scheme. This would be used to determine and calculate the amount of contribution to be contributed in your next financial year of the scheme. Therefore, self-employed persons would have a choice, unlike normal employer and employees, to choose to use their monthly or yearly relevant income as the contribution basis.

• How to calculate my relevant income basis? Is the rate for my contribution also a 5%?

As Self-employees do not have a fixed monthly income, the calculation for their relevant income basis would be more complicated than normal employee. There are 4 ways in calculating the relevant income of a self-employed person:

- taking the assessable profits stated in their most recent notice of assessment issued by the Inland Revenue Department as their relevant income;

- taking the basic allowance as defined under section 28 of the Inland Revenue Ordinance as their relevant income;

- taking the maximum relent income level per year as their relent income, i.e. a yearly income HKD 18,000; or

- making an income declaration to their trustees, and take the assessable profits from last year as their relevant income of this year.

If you are a partner of a partnership company, your relevant income for the MPF scheme's financial year should be calculated by making proportional adjustments based on your share of profits of the partnership business for that period. The rate of contribution for self- employed persons is set at 5%. The minimum relevant income level set for the mandatory contribution is a monthly of HKD 7,100, or a yearly of HKD 85,200; while the maximum relevant income level set is a monthly of HKD 30,000 or a yearly of HKD 360,000.

• Employers would handle the payment for their employees, how about us? How can self-employed persons pay their contributions?

There are 2 major ways for self-employed persons to pay their contributions:

- A direct payment by handing a cheque to your MPF trustee

- By authorizing payment, your MPF trustee could help you to pay via direct bank transfer

Self-employees would have to confirm your contribution frequency (monthly or yearly), before the establishment of your MPF account. If you would wish to change your contribution frequency, you have to fill in the relevant form and send it to your trustee at least 1 month before the last day of the financial year of the scheme.

Managing your own MPF account could be one complicated and confusing matter. Therefore, it is extremely crucial that you have a trust-worthy and professional MPF agent handling all those trivial matters for you. OneStart Business Centre have years of experience in providing professional business services, in company formation, accounting and secretary service. We have now broadened our scope of professional services. OneStart Business Centre's new MPF consultation service includes different aspects, aiming to provide you with a one-line business service.

Interested in OneStart Business Centre’s insurance and MPF consulting services? Phone in to our hotline 3575 6888 or WhatsApp our helpful consultants!