How to File a Hong Kong Employer’s Return Using BIR56A and IR56B Form
10 minute read
The Employer’s Return of Remuneration and Pensions, or known simply as the employer’s return, is an annual form that states what your employees receive in salary and benefits.
As a Hong Kong business owner, you would need to report your employees’ salary and submit the said forms to the Hong Kong Inland Revenue Department (IRD).
Handling these cumbersome tax obligations (and actually remembering to do so) is something that you, as a business owner, would need to manage on a yearly basis. Mistakes can lead to costly penalties from the IRD. Need help on how to file your employer returns? You’ve come to the right place.
Let’s get started.
Overview:
What is the employer’s return form (IR56B) and what does it include?
All business owners in Hong Kong who have salaried staff need to submit this form.
Here’s the information needed within IR56B:
- Employee’s name and address
- Nature of employment (full-time or part-time)
- Job title
- Salary amount
- Benefits
- Full period of employment
- Employee and employer contributions to the Mandatory Provident Fund (MPF)
- Employment contract
For your employer’s returns to be accurate, you would need to:
- Start and maintain a payroll record for your employees, and keep these records for at least 7 years.
- The second thing you need to do is report how much your employees earn.
If you need to update or change your records, do inform the Hong Kong Inland Revenue Department.
You would also need to submit the following forms:
- BIR56A and IR56B – Employer’s Return
- IR56E – form filled out for every new employee
- IR56F – form filled out after termination of an employee or their death
- IR56G – form filled out when an employee leaves Hong Kong permanently or for a substantial period of time
If you’re the company director, you are required to file an employer’s return for yourself as well.
Let’s deep dive into the various forms below.
Form BIR56A and Form IR56B
The IR56A represents the employer’s return of remuneration and pensions for the current fiscal year. It includes:
- Company name and address.
- Name of person who created the return.
- Number of completed IR56 forms, as every employee would need one form.
- All submitted forms and if they were submitted as a hardcopy, online, or mixed.
The IR56B is the employer’s return of remuneration and pensions for individual employees. It contains the employee’s personal particulars, designation, salary, benefits, and remuneration package.
Quick checklist on what to include for Form IR56B
Besides the usual items such as bonuses, commissions, leave pay, and salary, you would need to include these:
- Back pay.
- Payment in lieu of notice.
- Contract gratuities that exceed the statutory entitlement per the Hong Kong Employment Ordinance, like for example the lump sum payment in the form of termination payments.
- Contributions the employer voluntarily would make to MPF/ORSO by the employee on termination of services.
- Any educational costs or benefits from the company
- Share option gains from company
- Prerequisites paid in cash can be converted into cash or has cash value, such as gifts.
- Cash allowances in any form.
- Medical insurance premiums from the company.
- Payment or income the employee received from other parties during their course of work. An example would be tips received
Housing allowances. - Overseas income paid by the company
When is the submission period and deadline for IR56B?
The submission period is from 1st to 30th April.
Do note that the deadline is one month from the day your company is issued the BIR56A form. This happens on the first working day of April every year and the form has a date printed on it.
For example, if your first working day of April falls on the Friday of 2nd April, your deadline would be 3rd May.
If your company doesn’t have any employees, has not ceased, or just started operations during the current assessment year, you would need to fill out the BIR56A and IR56B forms instead, and submit them by 30th April as well.
If you own a newly incorporated company, the IRD will issue you with the BIR56A 3 to 6 months after you file your first audit.
How to extend your deadline
If for whatever reason you can’t submit your Hong Kong employer’s return in time and need additional time to prepare your IR56B form, you can write in to request for an extension from the IRD.
Do include the following:
- Employer’s file number
- Company name
- Fiscal year of the assessment concerned
- Amount of additional time required for your deadline extension
- Reason why you’re applying for the extension
- Evidence that supports your claims
What is the penalty for missing the deadline of the employer’s return?
The IRD imposes strict requirements on inaccurate or late submissions. As mentioned earlier, if you are not able to submit on time or accurately, you would be penalized.
If you don’t submit your annual IR56B, you would be fined HKD 10,000.
How do I file my employer’s return?
Before you file your employer’s return, you need to make sure all your employee and payroll information for the current financial year is ready and updated accurately.
Form submission formats:
- Both BIR56A and IR56B in hard copy. You can download the forms from the IRD’s website or obtain them from the Fax-A-Form Service. The submitted forms in written format will require a physical delivery mode and a wet-signature from the company director, secretary, managers, or liquidators.
- BIR56A in hardcopy and IR56B in soft copy. A digital IR56B form can be sent within a storage device.
- By using the e-filing service. We highly recommend this method as it is the most hassle-free. When filing your return on ER e-filing services, you can either go for the online or mixed mode.
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Submit returns physically
Tick the “YES” or “NO” box to specify if there is a person who falls within the scope Note 1(a) of the Notes and Instructions for Form BIR56A.
If you ticked “YES”, then write the number of the submitted IR56B Forms.
- In item (1) report on the number of paper IR56B submitted.
- In item (2) write the number of IR56B records submitted via a storage device.
- In item (3) report on the number of IR56B records uploaded via the Employer’s Return e-Filing Services.
The Employer’s Return (BIR56A) must be signed by one of the following people:
- Proprietor for a sole proprietorship business
- Precedent Partner for a partnership business
- Company Secretary/ Manager /Director /Investment Manager – for open-ended fund companies
- Provisional Liquidator/ Liquidator for a corporation
- Principal Officer – for a body of persons
- Agent – for a non-resident person
Submit returns online
To submit your return online, you will need an account of the IRD’s online services, known as eTAX. Only an Authorized Signer can create an account on eTAX and provide duly signed returns.
These people are authorized to sign the return:
- Proprietor for a sole proprietorship
- Precedent partner for a partnership business
- Director, investment manager (only applicable to companies with open-ended funds), manager, company secretary, or a liquidator
- Principal officer for a body of persons
Do prepare data in these following ways for submission:
- Direct Keying – includes all types of employer’s returns and notifications
- IR56 Forms Preparation Tool – includes the IR56B and IR56F forms
- IRD IR56B Software – includes the IR56B annual form with the employer’s return submission
- Pre-approved Self-developed Software – includes the IR56B and IR56F forms
Submit returns online without an authorized signer’s account
By using this method, you can submit and sign your IR56B or IR56F forms online without using an Authorized Signer’s personal eTAX account.
Any authorized person appointed by the employer has the ability to upload the IR56B/IR56F data files through the e-Filing Services. The software or submission tool can help to automate your process, holding up to 800 IR56 form records easily.
Here’s the breakdown:
- Using the IR56 Forms Preparation Tool – includes the IR56B and IR56F forms
- Using IRD IR56B Software – contains the IR56B annual form
- Using pre-approved self-developed Software – includes the IR56B and IR56F forms
Other considerations
Wondering how you should file your returns if you are the company director? Or perhaps you have overseas employees, freelancers or part-timers, employees who are terminated or are leaving Hong Kong for good.
Here’s what to do for these various scenarios.
If you are your own company director, do include your own particulars and remuneration package. You would do it via: i) regular salary payment or ii) director’s fees.
Payment is made every financial year end, based on performance reviews. They are also subject to salary tax.
Employees (both local and overseas) with a total annual income that is equal to or higher than HKD $132,000 per year must be included in your returns.
If you need to provide additional information or details, you can do so in the remarks column, item 14 of the form IR56B.
For your part-time staff and freelancers, the returns form filing process is different for them as compared to your full-timers.
Use the IR56B form for part time employees and IR56M form for freelancers.
For employees who are terminated, you are required to make termination payment and file a return form for them too. Fill up form IR56F and submit it one month before the date of termination.
If one of your employees is leaving Hong Kong for good, you would need to take these steps:
- Find out the expected date of their departure.
- File two copies of the IR56G form or file it via electronic filing one month before the expected departure.
- Disburse all of the income that the employee is owed, but not before they produce the IRD-issued letter of release that proves they fulfilled all of their tax obligations in Hong Kong.
Wrap up
As a business owner in Hong Kong, there’s so much to keep up with. Be it managing, updating your corporate governance documents, filing them within stipulated deadlines, or staying compliant with government regulations. The process can be time-consuming and challenging.
We are here to help.
Our corporate secretary services will take the load of your admin hassle. Have questions about how to file your employer’s returns? Speak to our team today for a free consultation.
