A recognized retirement scheme means:
- a Mandatory Provident Fund scheme (“MPF scheme”)
- a recognized occupational retirement scheme (“ROR scheme”)

Payment to an employee from a recognized retirement scheme:

• The employer’s contributions to the recognized retirement scheme do not constitute income of the employee for tax purposes.
• The portion attributable to the employer’s contribution is not taxable if it is paid upon retirement, death, incapacity, terminal illness or termination of service.
• The portion attributable to the employer’s mandatory contribution from an MPF scheme is not taxable if it paid on termination of employment or upon permanent departure from Hong Kong but without terminating service.
• For the portion attributable to the employer’s contribution (mandatory and voluntary) from an ROR scheme or voluntary contribution from an MPF scheme, the “accrued benefit” is not taxable if it is paid on termination of employment with services for more than 120 months. For termination of employment with service less than 120 months, the exemption limit for the accrued benefit is called “proportionate benefit” which is defined as: the accrued benefit X no. of completed month of service / 120 months. Any excess over the limit is taxable.
• The portion attributable to employer’s contribution (mandatory and voluntary) from an ROS scheme or voluntary contribution from an MPF scheme is taxable if it is paid upon permanent departure from Hong Kong but without terminating service.
• If an employee withdraws a sum representing the employer’s contribution not because of retirement, death, incapacity, terminal illness, termination of service or permanent departure from Hong Kong but without terminating service, the sum will be wholly assessable.
• Amounts received by an employee from pension or provident fund, scheme or society which is not a recognized retirement scheme attributable to employer’s contributions are taxable.

An individual taxpayer can claim deduction for his mandatory contribution to a recognized retirement scheme. The maximum deduction from 2015/16 onwards is HK$18,000 per year. In addition, starting from 1 April 2019, taxpayers may also claim deductions for MPF voluntary contributions paid in a “Tax Deductible MPF Voluntary Contribution” account defined under the MPF Scheme Ordinance. The maximum deduction from 2019/20 onwards is HK$60,000. The said amount should be the aggregate of the qualifying annuity premiums and tax deductible MPF voluntary contributions, tax deductible MPF voluntary contributions are to be firstly allowed while qualifying annuity premiums are to be secondly allowed.

Source：Hong Kong Inland Revenue Department’s website

- https://www.ird.gov.hk/eng/pdf/bir60_st_e.pdf
- https://www.ird.gov.hk/eng/pdf/dipn23.pdf
- https://www.gov.hk/en/residents/taxes/salaries/allowances/deductions/annuity.htm
- https://www.ird.gov.hk/eng/pdf/esem_er_mpfe.pdf