Employers can enjoy tax exemption on their total mandatory and voluntary contributions subject to a maximum of 15% of the total emoluments of the employee(s). However, any voluntary contributions made by an employee are subject to Salaries Tax. Please note that employee mandatory contributions are not subject to Salaries Tax up to a maximum limit of HK$15,000 per year.
When an employee receives accrued benefits from an MPF scheme, the benefit amount is not usually subject to tax, except for any amount that is derived from the employer's voluntary contributions, to the extent that the amount exceeds the "Proportionate Benefits" as defined in the Inland Revenue Ordinance. Then, the excess portion is subject to tax.
"Proportionate Benefits" is defined as the number of completed months of service divided by 120, then multiplied by "Accrued Benefits". The accrued benefits for the purpose of this calculation will be the full amount of benefits derived from the employer's voluntary contributions. For example, if an employee worked for 4 years, the proportionate amount will be 40% (i.e. 48/120) of the accrued benefits.