Mileage allowance in Hong Kong: everything you wanted to know
How does mileage allowance in Hong Kong work?
- Company policy: you can set up mileage allowance rates depending on your own company’s business travel policies tailored to your financial practices and operational needs
- Standard benchmarks and other companies: to reach a fair rate, you can use CUHK’s standard rate guidelines or base rates off of the rates of other companies within your industry
- The nature of your employee’s contract: review your employee’s contract, as their position, hours, and benefits can help indicate standards for setting up fair reimbursement rates
How to reimburse your employees for mileage in Hong Kong
- Create a mileage reimbursement policy if you haven’t already: create a document stating the conditions for mileage reimbursement. Include important information such as procedures for employees reporting mileage, which trips are eligible for reimbursement, rate calculations, and examples.
- Match industry standards, benchmarks, and government guidelines: when deciding on your allowance rates, you can look towards Hong Kong’s guidance rate (HK$ 4.02 per kilometer for motorcars and HK$ 1.49 per kilometer for motor vehicles), industry benchmarks, and other company mileage rate policies.
- Set up a mileage logging system for employees: when traveling for business purposes, have employees document the trip’s purpose, location, destination, date, and total distance traveled. You can either set up a physical logbook or a digital tracking tool for employees to submit; along with a mileage reimbursement form and receipts.
- Ensure your reimbursement is tax compliant: when reimbursing employees, be sure to conduct audits to ensure claims are in line with both your company’s policy and the guidelines outlined by the Inland Revenue Department of Hong Kong. Reimbursements must be wholly for business purposes and necessary for employees to perform their duties.
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FAQS for mileage allowance rates in Hong Kong
1. What other entities don’t have mileage allowance rates mandated by law?
2. Do standard mileage rates for reimbursement apply to public transport as well as motor vehicles in Hong Kong?
3. What are the conditions for Local Subsistence Allowance in Hong Kong?
4. Are there other employee benefits in Hong Kong besides mileage reimbursement?
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