End of Year Employer’s Return in Hong Kong: What you need to know
The Hong Kong Employer’s Return of Remuneration and Pensions is a document that you must complete if your business is paying salaries. This form, also known as BIR56A and Form IR56B, tells the Inland Revenue Department (IRD) how much you paid individuals working for your company in Hong Kong.
As a quick summary, the Employers Return report includes:
The total amount paid through salary and benefits to each employee in the year 1 April to 31 March
The total amount paid to non-employee contractors and freelancers,
Any deductions that were taken from an employee's pay, such as MPF.
In this article, we’ll dive into the details of what it is and the procedures you need to follow, including deadlines.
What is the Employer’s Return of Remuneration and Pensions?
The Employer’s Return is a submission to the IRD that includes a summary of regular wages, commissions, bonuses, benefits (such as housing), and share option gains to each individual employee working for a Hong Kong company.
Why do companies report salaries to the IRD?
Salaries Tax is paid by the individual in Hong Kong (and not by the company). Individuals are tasked with preparing a tax return to reflect income for each year from 1 April to 31 March.
The annual Employer’s Return informs the IRD of the total payments to each individual, which ensures the accuracy of the information given by individuals for salaries tax assessments.
Which individuals need to be included in the Employer’s Return?
Hong Kong companies need to report salaried staff, including:
Directors
All employees paid HK$ 132,000 or above per year
If you work with freelancers or contractors, you’ll still need to report payments to them using form IR56M. This is known as the Notification of remuneration paid to persons other than employees. This covers individuals such as:
Non-incorporated subcontractors (i.e. sole proprietorships or partnerships) paid above HK$ 200,000 in the tax year
Consultants, agents, brokers, artists, local entertainers, and other freelancers paid above HK$ 25,000 in the tax year.
This does not apply for payments to other companies or to persons overseas.
File your Employer’s Return
When do we need to submit the form?
Typically, a paper copy of the Employer’s Returns will be sent to businesses by the IRD each year on 01 April. Returns must be filed within one month. If your company receives a return, you have to file it even if you did not make any payments.
If your business has recently been established, has no employees, or is not active for the current assessment year, you must complete and submit Forms BIR56A and IR56B by April 30th. You can expect the IRD to issue you your BIR56A forms within 3-6 months of your first audit.
What if we didn’t receive a form?
If you did not receive a return, but you did pay individuals, you are required to inform the IRD and request a return.
Can I submit the forms online?
You can choose how to submit the forms:
BIR56A and IR56B in paper forms
BIR56A in paper copy and soft copy of the IR56B records
By ER e-filing services, the most convenient method.
The online e-filing service is available on the IRD website after you complete the set-up process, including identity verification.
For guidance on this or any part of the Employers Return, we offer company secretary services, get in touch with us to find out more.
How can I prepare for the Employer’s Return in advance?
It’s best to collect all information needed before any payments are made. For employees, this should be at the beginning of employment or when engaging freelance consultants. This ensures that there are no gaps when it is time to file the Employer’s Return.
That brings us to the next question.
What information is required in the IR56B form?
Employee’s details: Name, address, marital status (and name of spouse, if married), Hong Kong ID number, Sex
Job title
Salary amount
Period of employment
All income, including benefits such as housing allowance, education allowance, bonuses, and commission.
Employee contributions to the Mandatory Provident Fund (MPF)
Employer contributions to the Mandatory Provident Fund (MPF)
You can take a look at the IRD’s sample, which also offers instructions on how to complete it.
Some reminders of best practices:
Collect information up front when onboarding a freelancer or employee. If the employee or freelancer is no longer working with you at the end of the tax year, it can be difficult to collect that information.
Remember to report remuneration paid to freelancers
Always request an Employer’s Return. This is a requirement, even if no payments have been made.
Always report accurately and on time. If you don't submit your annual IR56B, you will be fined HKD 10,000.
Step-by-step instructions on filing the employers return
Filing the BIR56A in paper form
The steps of filing the Employer’s Return in paper form are:
Tick the YES or NO box to specify if they were any persons who were within the scope of Note 1(a) of the Notes and Instructions for Form BIR56A
If you ticked YES, you would need to fill in the following:
Item (1) – the number of papers IR56B submitted
Item (2) – the number of IR56B records submitted via a storage device (i.e., CD-ROM, DVD-ROM, USD)
Item (3) – the number of IR56B records uploaded visa the ER e-filing services
The BIR56A must be signed by one of the following persons:
Proprietor for a sole proprietorship
Precedent partner for a partnership
Company secretary, manager, director or investment manager for open-ended fund companies
Provisional liquidator or liquidator for a corporation
Principal officer for a body of persons
Agent for a non-resident person
If you file the IR56B through a storage file or ER e-filings services, you must submit a signed Control List. Printed copies of the IR56B are not required to be submitted if the records are submitted through this method.
ER e-filing services
There are two modes of submitting the Employer’s Return through the e-filing service, which is the online mode and mixed mode.
Online mode
Requires an eTAX account, and only the authorized signer can log in
An authorized signer is one of the following persons:
Proprietor for a sole proprietorship
Precedent partner for a partnership
Company secretary, manager, director, or investment manager for open-ended fund companies
Provisional liquidator or liquidator for a corporation
Principal officer for a body of persons
Submission of a data file by Direct Keying:
Employers can use the Direct Keying service to submit the Employer’s Return BIR56A, IR56B, IR6036B and IR56M, and the Employer’s Notifications IR56E, IR56F and IR56G.
Employers can submit these forms through the online mode only once each year of assessment. Multiple submissions for the same year is not permitted.
Data files created by Direct Keying can contain only up to 30 sets of IR56B/M forms.
Submission of a data file by uploading:
Employers can submit a data file that can contain up to 800 sets of IR56 forms.
The following tools will be needed to prepare the forms:
IR56 forms preparation tools – IR56B and IR56F
IRD IR56B software – annual Form IR56B with the submission of Employer’s Return
Pre-approved self-developed software – IR56B and IR56F
Mixed mode
For the mixed mode, employers can submit the IR56B or IR56F data file without using the authorized signer’s eTAX account.
The appointed person can upload the forms containing up to 800 IR56 form records by the following tools:
IR56 forms preparation tools – IR56B and IR56F
IRD IR56B software – annual Form IR56B with the submission of Employer’s Return
Pre-approved self-developed software – IR56B and IR56F
Once the data file is uploaded, a Control List is generated by the system that the authorised signer will sign and submit to the IRD in paper form to complete the process.
For annual submissions of the IR56B records, a completed and signed BIR56A must be submitted with the Control List.
It is important to ensure all Control Lists are signed and submitted to complete the submission process.
