Do I Need a Local Entity to Hire in Hong Kong?

In Hong Kong, a "local entity" typically refers to a registered business that can legally employ staff, such as a subsidiary or branch office. This setup allows you to fulfill local employment obligations, including payroll and tax responsibilities. Without a local entity, you can't directly manage payroll or comply with local employment laws.

However, an alternative is to use an Employer of Record (EOR), which acts as your local employer, managing payroll and compliance on your behalf while you focus on your business operations.

What is Required to Employ Someone in Hong Kong?

• Local employing entity required to directly employ? Yes (unless using an EOR)
• Payroll registration required? Yes (you must register with the Inland Revenue Department)
• Withholding/tax remittance required? Yes (employers must withhold salaries tax)
• Social contributions required? Yes (mandatory MPF contributions apply)
• Local employment agreement required? Yes (written contracts are standard practice)
• Mandatory benefits to budget? Yes (statutory holidays, sick leave, and MPF)
• Works council/collective agreements considerations? Usually no (Hong Kong has limited collective bargaining)

Best Options If You're Hiring in Hong Kong

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but be cautious about misclassification risks.

While hiring contractors doesn't require a local entity, Hong Kong's labor laws are strict. If the contractor is deemed to be functioning like an employee, you could face legal repercussions. Here are some key considerations:

• Ensure the contractor operates independently and is not integrated into your business.
• Define clear project scopes and avoid controlling their work methods.
• Keep the relationship genuinely contractual, with limited oversight.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Hong Kong, depending on the type of business and registration processes.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated HKD 2,000–5,000 per month ($255–$640)
• Payroll provider: Estimated HKD 1,500–3,500 per employee per month ($192–$448)
• Employer registrations and recurring compliance: Estimated HKD 5,000–10,000 per year ($640–$1,280)
• Corporate tax filings and annual reporting: Estimated HKD 10,000–20,000 per year ($1,280–$2,560)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 p/month with Playroll)
• Pass-through statutory costs (e.g., employer MPF contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Hong Kong

Hiring in Hong Kong can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Hong Kong quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.