documentation/content/applications/finance/fiscal_localizations/hong_kong.md

# Hong Kong

## Configuration

{ref}`Install <general/install>` the following modules to get the latest features of the Hong Kong
localization:

```{eval-rst}
.. list-table::
   :header-rows: 1

   * - Name
     - Technical name
     - Description
   * - :guilabel:`Hong Kong - Accounting`
     - `l10n_hk`
     - The base module to manage chart of accounting and localization for Hong Kong.
   * - :guilabel:`Hong Kong - Payroll`
     - `l10n_hk_hr_payroll`
     - Enables :ref:`payroll <hong_kong/payroll>` specific localization features for Odoo *Payroll*
       app. This module also installs :guilabel:`Hong Kong - Payroll with Accounting` and
       :guilabel:`Documents - Hong Kong Payroll`.
   * - :guilabel:`Hong Kong - Payroll with Accounting`
     - `l10n_hk_hr_payroll_account`
     - Installs the link between Hong Kong payroll and accounting.
   * - :guilabel:`Documents - Hong Kong Payroll`
     - `documents_l10n_hk_hr_payroll`
     - Integrates employee ir56 forms in the Odoo *Documents* app.
```

## FPS QR codes on invoices

{abbr}`FPS (Faster Payment System)` is a payment service platform that allows customers to make
instant domestic payments to individuals and merchants in Hong Kong dollars or Renminbi via online
and mobile banking.

### Activate QR codes

Go to {menuselection}`Accounting app --> Configuration --> Settings`. Under the {guilabel}`Customer
Payments` section, tick the checkbox beside the {guilabel}`QR Codes` feature. Then, click
{guilabel}`Save`.

### FPS bank account configuration

Go to {menuselection}`Contacts app --> Configuration --> Bank Accounts section --> Bank Accounts`.
Then select the bank account for FPS activation. Proceed to set the {guilabel}`Proxy Type` and fill
in the {guilabel}`Proxy Value` field, depending on the type chosen.

Remember to include the invoice number in the QR code, by ticking the {guilabel}`Include Reference`
checkbox.

```{image} hong_kong/hk-fps-bank-setting.png
:align: center
:alt: FPS bank account configuration.
```

:::{important}
- The account holder's country must be set to `Hong Kong` on its contact form.
- The account holder's city is mandatory.
- You could also include the invoice number in the QR code by checking the {guilabel}`Include
  Reference` checkbox.
:::

:::{seealso}
{doc}`../accounting/bank`
:::

### Bank journal configuration

Go to {menuselection}`Accounting app --> Configuration --> Journals` and open the bank journal.
Then, fill out the {guilabel}`Account Number` and {guilabel}`Bank` fields, located in the
{guilabel}`Journal Entries` tab.

```{image} hong_kong/hk-bank-account-journal-setting.png
:align: center
:alt: Bank Account's journal configuration.
```

### Issue invoices with FPS QR codes

When creating a new invoice, open the {guilabel}`Other Info` tab and set the {guilabel}`Payment
QR-code` option to {guilabel}`EMV Merchant-Presented QR-code`.

```{image} hong_kong/hk-qr-code-invoice-setting.png
:align: center
:alt: Select EMV Merchant-Presented QR-code option.
```

Ensure that the {guilabel}`Recipient Bank` is configured, as Odoo uses this field to generate the
FPS QR code.

(hong-kong-payroll)=

## Payroll

:::{important}
Ensure the {guilabel}`Hong Kong - Payroll` (`l10n_hk_hr_payroll`) module is installed before
proceeding.
:::

### Create employees

Go to the {menuselection}`Employees` app and click {guilabel}`New`. Then, configure the following
fields:

- Under the {guilabel}`Work Information` tab

  - {guilabel}`Working Hours`: {guilabel}`HK Standard 40 hours/week` option **must** be selected.

- Under the {guilabel}`Private Information` tab

  - {guilabel}`Surname, Given Name, Name in Chinese`: name of the employee.
  - {guilabel}`Private Address`: address of the employee.
  - {guilabel}`Bank Account Number`: employee's bank account number.
  - {guilabel}`Current Rental`: employee's rental records (if rental allowance is applicable).
  - {guilabel}`Autopay Type`: {guilabel}`BBAN`, {guilabel}`SVID`, {guilabel}`EMAL`, etc.
  - {guilabel}`Autopay Reference`: autopay reference number.
  - {guilabel}`Identification No`: HKID of the employee.
  - {guilabel}`Gender`: gender of the employee.

  :::{important}
  For the {guilabel}`Bank Account Number`, this account should be set as {guilabel}`Trusted`
  before further processing.

  To achieve this, click on the right-arrow button next to {guilabel}`Bank Account Number` field.
  Set the {guilabel}`Send Money` to {guilabel}`Trusted` by clicking on the toggle.
  :::

  :::{note}
  To populate the {guilabel}`Current Rental`, click on the {guilabel}`History` button.
  Then, click on {guilabel}`New`. Fill in the relevant details and save the rental record. Upon
  saving the record, the rental contract {guilabel}`state` will be visible (at the top-right
  corner) and can be set to {guilabel}`Running`.
  :::

- Under the {guilabel}`HR Settings` tab:

  - {guilabel}`Volunteer Contribution Option`: select either {guilabel}`Only Mandatory
    Contribution`, {guilabel}`With Fixed %VC`, or {guilabel}`Cap 5% VC`.
  - {guilabel}`MPF Manulife Account`: account number, if applicable.

(hong-kong-manage-contracts)=

### Manage contracts

Once the new employee has been created, click the {guilabel}`Contracts` smart button on the
employee record, or navigate to {menuselection}`Employees app --> Employees --> Contracts`.

:::{note}
Only **one** contract can be active simultaneously per employee, but an employee can be assigned
consecutive contracts during their employment.
:::

The following are critical for setting up a contract:

- {guilabel}`Salary Structure Type`: set as {guilabel}`CAP57: Hong Kong Employee`.

- {guilabel}`Contract Start Date`: start date of employment.

- {guilabel}`Working Schedule`: set as {guilabel}`HK Standard 40 hours/week` (from employee record).

- {guilabel}`Work Entry Source`: select either {guilabel}`Working Schedule`, {guilabel}`Attendances`
  or {guilabel}`Planning`. This field determines how the work entries are accounted for in the
  payslip.

  - {guilabel}`Working Schedule`: the work entries are generated automatically based on the
    employee's working schedule.
  - {guilabel}`Attendances`: the work entries are generated based on the check-in/out period logged
    in the *Attendances*.
  - {guilabel}`Planning`: the work entries are generated from planning shifts only.

- Under the {guilabel}`Salary Information` tab

  - {guilabel}`Wage Type`: select {guilabel}`Fixed Wage` for Full-time or Part-time employees, or
    {guilabel}`Hourly Wage` for employees who are paid hourly.
  - {guilabel}`Schedule Pay`: the frequency of payslip issuance.
  - {guilabel}`Wage`: {guilabel}`Monthly` or {guilabel}`Hourly` depending on the {guilabel}`Wage
    Type`.
  - {guilabel}`Internet Subscription`: this is an **optional** field to provide additional internet
    allowance on top of the current salary package.

:::{important}
Timesheets do **not** impact work entries in Odoo.
:::

Once all information has been setup, set the contract status to {guilabel}`Running` by clicking the
{guilabel}`Running` button in the top-right of the page.

```{image} hong_kong/hk-contract.png
:align: center
:alt: Hong Kong employment contract.
```

(hong-kong-running-payslips)=

### Generate payslips

Once the employees, and their contracts, are configured, payslips can be generated in the *Payroll*
app.

Odoo provides **four** different salary structures under CAP57 regulation:

1. {guilabel}`CAP57: Employees Monthly Pay`: to process the monthly employee salary.
2. {guilabel}`CAP57: Payment in Lieu of Notice`: to process final payment upon contract termination
   using {abbr}`ADW (Average Daily Wage)`.
3. {guilabel}`CAP57: Long Service Payment`: applicable to employees with more than five years of
   service upon contract termination.
4. {guilabel}`CAP57: Severance Payment`: applicable to employees with more than two years of service
   upon contract termination.

Before running the payslips, the accounts used in the salary rule can be adjusted by navigating to
{menuselection}`Payroll app --> Configuration --> Rules`.

```{image} hong_kong/hk-salary-rules.png
:align: center
:alt: Hong Kong Salary Rules.
```

Odoo can create pay runs in two ways: via {ref}`batch <hong_kong/batch_payslips>` or
{ref}`individual <hong_kong/individual_payslips>` payslips.

(hong-kong-batch-payslips)=

#### Batch payslips

This method of payslip generation is used for recurring payments, since multiple employee payslips
can be managed at once. Go to {menuselection}`Payroll app --> Payslips --> Batches`.

1. Click on {guilabel}`New`.
2. Enter a {guilabel}`Batch Name` (e.g. `2024 - Jan`) and {guilabel}`Period` (e.g. `01/01/2024` -
   `01/31/2024`).
3. Click on {guilabel}`Generate Payslips`.
4. Choose which {guilabel}`Salary Structure` to use for this batch. The department filter allows the
   batch to only apply to a specific group of employees.
5. Click on {guilabel}`Generate`.
6. A {guilabel}`Payslips` smart button is created automatically.

Next, click {guilabel}`Create Draft Entry` to generate a draft journal entry found in the
{guilabel}`Other Info` tab of each payslip. A {guilabel}`Confirmation` pop-up window appears asking
{guilabel}`Are you sure you want to proceed?`. Click {guilabel}`Ok` to create the journal entries.

(hong-kong-individual-payslips)=

#### Individual payslips

Go to {menuselection}`Payroll app --> Payslips --> All Payslips`.

This method of payslip generation is commonly used to handle non-recurring payments (e.g.
{guilabel}`CAP57: Payment in Lieu of Notice`, {guilabel}`CAP57: Long Service Payment` or
{guilabel}`CAP57: Severance Payment`).

1. Click on {guilabel}`New`.
2. Select an {guilabel}`Employee`. When selected, the {guilabel}`Contract` is filled out
   automatically.
3. Add a pay {guilabel}`Period`.
4. Select a salary {guilabel}`Structure` (e.g. {guilabel}`CAP57: Employees Monthly Pay`).
5. The {guilabel}`Worked Days & Inputs` tab automatically compute the worked days/hours and time off
   leaves that are applicable.
6. Additional payslip items can be added at this time (e.g. {guilabel}`Commissions`,
   {guilabel}`Deductions`) under the {guilabel}`Other Inputs` section.
7. Click on {guilabel}`Compute Sheet` button to generate the payslip lines. This button updates
   the {guilabel}`Salary Computation` tab.

:::{note}
If the work entry for an employee was amended, click the {icon}`fa-cog` {guilabel}`(gear)` icon,
then click {guilabel}`Recompute Whole Sheet` to refresh the payslip's {guilabel}`Worked Days &
Inputs` tab.
:::

The {guilabel}`Salary Computation` tab shows the detailed breakdown of the computation, based on
the salary rules configured for each structure type.

1. {guilabel}`Rent Allowance`: amount derived from the employee's active rental record.
2. {guilabel}`Basic Salary`: amount of base salary provided (after rent allowance deduction).
3. {guilabel}`713 Gross`: net payable amount considering *Commission*, *Internet Allowance*,
   *Reimbursements*, *Back-pay*, *Deduction*, etc.
4. {guilabel}`MPF Gross`: net payable amount from 713 gross after consideration of additional
   allowances, deductions, and end-of-year payment.
5. {guilabel}`Employee Mandatory Contribution`: employee MPF Contribution.
6. {guilabel}`Employer Mandatory Contribution`: employer MPF Contribution.
7. {guilabel}`Gross`: net payable amount from MPF gross after consideration of MPF deductions.
8. {guilabel}`Net Salary`: final payable amount to be paid to the employee.

:::{important}
There are no MPF contributions for the first month. Both employee and employer contribution
starts on second month.
:::

```{image} hong_kong/hk-salary-computation.png
:align: center
:alt: Hong Kong Salary computation.
```

Under the {guilabel}`Other Inputs` section in {guilabel}`Worked Days & Inputs` tab, there are
additional manual input types:

- {guilabel}`Back Pay`: additional salary payout can be included under this category.
- {guilabel}`Commission`: the commission earned during the period can be manually entered here.
- {guilabel}`Global Deduction`: a lump-sum deduction from the entire payslip.
- {guilabel}`Global Reimbursement`: a lump-sum reimbursement to the entire payslip.
- {guilabel}`Referral Fee`: the additional bonus offered for any form of business-related referral.
- {guilabel}`Moving Daily Wage`: to override the {abbr}`ADW (Average Daily Wage)` value used for
  leaves computation.
- {guilabel}`Skip Rent Allowance`: if set, the rental allowance is excluded from the current
  payslip.
- {guilabel}`Custom Average Monthly Salary`: to override the average monthly salary used for
  end-of-year payment (rule is only applicable to payslips generated in December).
- {guilabel}`Lieu of Notice Period (Months)`: only applicable to {guilabel}`CAP57: Payment in Lieu
  of Notice` salary structure. By default, the final payout is set as 1-month. Use the
  {guilabel}`Count` field under the {guilabel}`Other Inputs` section to set a different notice
  period duration.

Once the payslips are ready, click on {guilabel}`Compute Sheet`, followed by {guilabel}`Create Draft
entry` to generate a draft journal entry found in the {guilabel}`Other Info` tab of the payslip.

### Pay employees

Once the draft journal entries have been posted, the company can now pay the employees. The user can
choose between **two** different *payment methods*:

- From the employee's payslip ({menuselection}`Payroll app --> Payslips --> All Payslips`), once the
  payslip's journal entry has been posted, click {guilabel}`Register Payment`. The process is the
  same as {doc}`paying vendor bills <../accounting/payments>`. Select the desired bank journal and
  payment method, then later reconcile the payment with the corresponding bank statement.
- For batch payments ({menuselection}`Payroll app --> Payslips --> Batches`), once all draft journal
  entries from the batch are confirmed, click {guilabel}`Mark as Paid` to post the payment journal
  entry. Then {doc}`create a payment <../accounting/payments>` in the *Accounting* app, and
  reconcile accordingly.

### Attendances and hourly wage

To configure the contract for an employee paid hourly using the *Attendances* app for hours
tracking, navigate to {menuselection}`Payroll app --> Contracts --> Contracts`.
Create a new {ref}`contract <hong_kong/manage_contracts>`. It is important to remember to set the
{guilabel}`Work Entry Source` as {guilabel}`Attendances`, and {guilabel}`Wage Type` as
{guilabel}`Hourly Wage`.

To record the hours logged by the employee using *Attendances* app:

1. Go to {menuselection}`Attendances app`.
2. The employee can check-in/out, via the kiosk mode and the time will be logged automatically.
3. In the {menuselection}`Payroll app`, review the attendance work entries generated from
   {menuselection}`Payroll app --> Work Entries --> Work Entries`.
4. Next, generate the {ref}`payslips <hong_kong/running_payslips>` and process the payment.

```{image} hong_kong/hk-attendance-work-entry.png
:align: center
:alt: Hong Kong Attendance Work Entry.
```

```{image} hong_kong/hk-attendance-payslip.png
:align: center
:alt: Hong Kong Attendance Payslip.
```

### Time Off with Payroll

The work entry types and time off types are fully integrated between the *Time Off* and
*Payroll* apps. There are several default time off types and work entry types specific to
Hong Kong which are installed automatically along with the *Hong Kong - Payroll* module.

Go to {menuselection}`Payroll app --> Configuration --> Work Entry Types` and click {guilabel}`New`.

There are two checkboxes to be considered when setting up the work entry type:

- {guilabel}`Use 713`: Include this leave type as part of 713 computation.
- {guilabel}`Non-full pay`: 80% of the {abbr}`ADW (Average Daily Wage)`.

```{image} hong_kong/hk-work-entry-type.png
:align: center
:alt: Hong Kong Work Entry Type.
```

:::{seealso}
{ref}`Creating and configuring work entry types <payroll/work-entries>`
:::

### Understanding 713 Ordinance

The *Hong Kong - Payroll* module is compliant with 713 Ordinance which relates to the
{abbr}`ADW (Average Daily Wage)` computation to ensure fair compensation for employees.

The ADW computation is as follows:

:::{figure} hong_kong/hk-adw.png
:alt: Hong Kong ADW Formula.

{abbr}`ADW (Average Daily Wage)` equals the total wage in a 12-month period, minus the wages of
non-full pay, divided by the total days in a 12-month period minus the days of non-full pay.
:::

:::{note}
For 418 compliance, there is no automated allocation of the *Statutory Holiday* entitlement to
the employees. As soon as 418 requirements are met, manually allocate the leaves, via the *Time
Off* app.
:::

:::{note}
Before generating payslips, ensure the statuses are {guilabel}`Done` to validate the outcome.
:::

```{eval-rst}
.. list-table::
   :header-rows: 1

   * - Period
     - Days
     - Wage
     - Commission
     - Total
     - ADW
     - Leave Value
   * - Jan
     - 31
     - $20200
     - $0
     - $20200
     - $651.61 ($20200/31)
     - N/A
   * - Feb
     - 28
     - $20200
     - $5000
     - $25200
     - $769.49 ($45400/59)
     - N/A
   * - Mar (One Day Annual Leave)
     - 31
     - $20324.33
     - $0
     - $20324.33
     - $730.27 ($65724.33/90)
     - $769.49
   * - Apr (One Day 80% Sick Leave)
     - 30
     - $20117.56
     - $0
     -
     -
     - $584.22 ($730.27*0.8)
```

```{eval-rst}
.. example::
   Here is an example demonstrating the 713 logic:

   - **Jan**: Generate a payslip with a monthly wage of $20200. The :abbr:`ADW (Average Daily Wage)`
     is always computed on a cumulative basis of the trailing 12-months.
   - **Feb**: Generate a similar payslip, but add an :guilabel:`Other Input Type` for the
     :guilabel:`Commission`.
   - **Mar**: Apply for **one** full-paid annual leave in March. The salary compensation for the
     leave taken is based on :abbr:`ADW (Average Daily Wage)` thus far.

     .. image:: hong_kong/hk-march-713.png
        :align: center
        :alt: Hong Kong March 713.

   - **Apr**: Apply for a 1-day non-full pay leave in April. Since this is a non-full pay leave, the
     :abbr:`ADW (Average Daily Wage)` is computed accordingly.

     .. image:: hong_kong/hk-apr-713.png
        :align: center
        :alt: Hong Kong April 713.
```

:::{note}
The value of {abbr}`ADW (Average Daily Wage)` is computed in the backend, and not be visible to
the user.
:::

:::{seealso}
- [HK 713 Ordinance](https://www.labour.gov.hk/eng/public/wcp/ConciseGuide/Appendix1.pdf)
- [HK 418 Ordinance](https://www.workstem.com/hk/en/blog/418-regulations/)
:::

### Generate reports

Before generating the below reports, setup the following in {menuselection}`Settings app -->
Payroll`.

Configure the following in the {guilabel}`Accounting` section:

- Tick the {guilabel}`Payroll HSBC Autopay` checkbox.

  - {guilabel}`Autopay Type`: Set as {guilabel}`H2H Submission`.
  - Select the {guilabel}`Bank Account` to use.

Configure the following in the {guilabel}`HK Localization` section:

- {guilabel}`Employer's Name shows on reports`
- {guilabel}`Employer's File Number`
- {guilabel}`Manulife MPF Scheme`

```{image} hong_kong/hk-report-setup.png
:align: center
:alt: Hong Kong Payroll Settings.
```

#### IRD report

There are a total of **four** IRD reports available:

- {guilabel}`IR56B`: employer's Return of Remuneration and Pensions.
- {guilabel}`IR56E`: notification of Commencement of Employment.
- {guilabel}`IR56F`: notification of Ceasation of Employment (remaining in HK).
- {guilabel}`IR56G`: notification of Ceasation of Employment (departing from HK permanently).

Go to {menuselection}`Payroll app --> Reporting`, and select one of the {guilabel}`IR56B/E/F/G
Sheet` options:

1. Click on {guilabel}`New`.
2. Fill in the relevant information for the IRD report.
3. Click on {guilabel}`Populate`, and the {guilabel}`Eligible Employees` smart button appears.
4. The {guilabel}`Employee Declarations` status is {guilabel}`Draft` and changed to
   {guilabel}`Generated PDF` status once the schedule runs.
5. Once the PDF is generated, the IRD form may be downloaded.

```{image} hong_kong/hk-ir56b.png
:align: center
:alt: Hong Kong IR56B report.
```

:::{note}
The scheduled action called *Payroll: Generate pdfs* can be manually triggered. It is set by
default to run the PDF generation monthly.
:::

#### Manulife MPF sheet

Go to {menuselection}`Payroll app --> Reporting --> Manulife MPF Sheet`.

1. Click on {guilabel}`New`.
2. Select the relevant {guilabel}`Year`, {guilabel}`Month`, and {guilabel}`Sequence No.`.
3. Click on {guilabel}`Create XLSX`.
4. The *Manulife MPF XLSX* file is then generated, and available for download.

```{image} hong_kong/hk-manulife-sheet.png
:align: center
:alt: Hong Kong Manulife Sheet.
```

:::{note}
Odoo will not be developing further reports for other MPF trustee as there will soon be an
eMPF platform setup by the local government.
:::

:::{seealso}
[eMPF](https://www.mpfa.org.hk/en/empf/overview)
:::

#### HSBC autopay report

If *HSBC Autopay* is selected as the batch payment method, click on {guilabel}`Create HSBC Autopay
Report`, and fill in the mandatory fields:

```{image} hong_kong/hk-generate-autopay.png
:align: center
:alt: Hong Kong HSBC Autopay wizard.
```

This creates an {file}`.apc` file format which can be uploaded to the HSCB portal for processing.