How to Pay Yourself From a Hong Kong Company: Salary, Director's Fees or Dividends

By Di Ma, Project Manager 31 OCT 2026 · 4 MIN READ

If you own and run a Hong Kong company, sooner or later you'll want to take money out of it. There are three proper ways: a salary, director's fees and dividends. They're taxed differently, they cost the company differently, and they're booked differently. Here's how they compare.

The three ways at a glance

Salary, director's fees or dividends: the main differences
	Salary	Director's fees	Dividends
Taxed in the recipient's hands	Salaries tax	Salaries tax	Not taxable
Deductible for the company	Yes, if for producing profits	Yes, if for producing profits	No: paid out of profits after tax
Reported on IR56B	Yes	Yes	No
MPF	Yes, for an employee	Only if paid under an employment contract	No
Company law condition	Employment terms	Approved fees	Distributable profits (s.297)

Salary and director's fees

Salaries tax is charged on income from "any office or employment of profit" (section 8 of the Inland Revenue Ordinance), and income includes any "wages, salary, leave pay, fee, commission, bonus" or allowance (section 9). A directorship is an office, so director's fees are taxed just like a salary. The IRD puts it plainly: "salaries and directors' fees received by directors are chargeable to Salaries Tax and should therefore be reported by means of form IR56B" (IRD).

The tax: at progressive rates of 2%, 6%, 10% and 14% on successive HK$50,000 bands of net chargeable income and 17% on the rest, or the standard rate (15% on the first HK$5 million of net income, 16% above) if that's lower (IRD rate table).
For the company: pay for work done in producing its profits is generally a deductible expense (section 16), which reduces its profits tax.
Reporting: it goes on your IR56B in the employer's return each April.

MPF: salary yes, director's fees it depends

MPF covers employees, meaning people working under an employment contract, which can be written or oral (MPFA). A director who is also employed by the company, and paid a salary, is in MPF like any employee (see MPF for employers). But the MPFA's guidance says that if a director has no employment relationship with the company, "the director's fee received is solely for holding an office and should not be included as his/her relevant income".

Dividends

Not taxed in Hong Kong: the IRD says employers "need not report dividends paid to shareholders of a limited company because dividends are not taxable".
Not deductible for the company: a dividend is paid out of profits after profits tax.
Only out of distributable profits: a company can only pay dividends out of accumulated realised profits, and the paperwork has to be right (see paying dividends).
Paid to shareholders, in proportion to their shares, not to directors for their work.

If you live or are taxed outside Hong Kong, your own country may tax salary, fees or dividends from a Hong Kong company. The mix that works in Hong Kong isn't always the one that works for you.

What not to do: just take the money

Withdrawing cash without a salary, fees or a declared dividend doesn't make it any of them. The money is owed back to the company through the director's current account, and once you owe the company, it's in substance a loan to a director, which the Companies Ordinance restricts. Decide what each payment is before it's made.

How each is booked

Salary: Dr Directors' salaries, Cr Bank (net pay) and MPF payable, through payroll every month.
Director's fees: Dr Directors' fees, Cr Accrued directors' fees when approved, then Cr Bank when paid.
Dividends: Dr Retained earnings, Cr Dividends payable when declared, then Cr Bank, or Cr the director's current account if left in the company.

The Certanta client portal, balance sheet of the fictional demo company Harbourfront Trading Ltd: assets, liabilities including trade payables and the director current account, and equity of share capital, retained earnings and profit for the period. — Retained earnings, where dividends come from, and the director's current account, where unplanned withdrawals end up, in the demo company's balance sheet.

How Certanta helps

Payroll, fees and dividends booked to their own accounts, every month.
The director's current account reconciled, so you always know whether the company owes you or you owe it.
Ask your books. "What are retained earnings at 30 September?" or "What did I draw this year?" are questions for the AI assistant in your portal.

Frequently asked questions

Are director's fees taxable in Hong Kong?

Yes. Director's fees are income from an office, chargeable to salaries tax like a salary, and the company reports them on the director's IR56B in the employer's return.

Are dividends taxable in Hong Kong?

No. The IRD states that dividends paid to shareholders of a limited company are not taxable, and they are not reported on the IR56B. Shareholders taxed elsewhere may be taxed in their own country.

Is it better to take a salary or dividends from a Hong Kong company?

It depends. A salary or director's fees are deductible for the company but taxed as your income; dividends are not taxed in Hong Kong but are paid out of profits after profits tax and only from distributable profits. Your own tax position, including outside Hong Kong, matters; ask your adviser.

Do directors need to contribute to MPF?

A director who is employed by the company under an employment contract is covered like any employee. The MPFA's guidance says a director's fee received solely for holding the office, with no employment relationship, is not relevant income for MPF.

What are the Hong Kong salaries tax rates?

Progressive rates of 2%, 6%, 10% and 14% on successive HK$50,000 bands of net chargeable income and 17% on the remainder, or the standard rate of 15% on the first HK$5 million of net income and 16% above, whichever gives the lower tax (from 2024/25).

Can I just withdraw money from my company?

Money taken without a salary, fees or a declared dividend is owed back to the company through the director's current account, and a balance owed by a director is in substance a loan, which the Companies Ordinance restricts.

Every payment to you, booked the right way

Certanta books salary, fees and dividends to the right accounts and keeps your director's current account reconciled, so the year-end and the employer's return agree.

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This article summarises the Inland Revenue Ordinance (Cap. 112), the IRD's published guidance and tax rate table, the MPFA's guidance and the Companies Ordinance (Cap. 622), as at 29 October 2026. It is general information, not tax advice. The best mix for you depends on your income, residence and plans; ask your adviser.