As a new tax year begins, employers are required to submit an “employer’s return” to the Inland Revenue Department (IRD) for their employees. Many people misunderstand that the employer’s submission of the application form is equivalent to the company paying the employee’s salary tax, but they are two separate things. On the first working day of April each year, the IRD will send the employer’s return (IR56AB) to most employers in Hong Kong, and the employer must submit it within the specified period in the letter (within one month). Late submission will result in a fine. In practice, the first offense will be fined $1200, and if it happens multiple times, the fine will be higher. After submitting the return, the employer should give a copy to the employee, and once the employee receives the return in May, they can fill it out based on the information provided.
According to the law, as an employer, you have a responsibility to keep records of your employees’ salary and report the salary paid to them to the IRD. Employers need to record and keep their employees’ employment information, including:
Information required for filling out the employer’s return
Personal information (name, address, Hong Kong ID card or passport number)
Employment status (full-time or part-time)
Job position
Employment contract
Employment period
Salary amount
Employee and employer’s contribution to mandatory provident fund (MPF) scheme
Non-cash and other fringe benefits (such as accommodation)
Marital status and spouse’s personal information (if married)
When an employee’s personal information is updated or their employment conditions change, the employer must provide relevant updated information to the IRD. In addition, employers need to keep business records, including payroll records, for at least seven years. Every year, employers also need to report the salary of each employee using the “Employer’s Return (BIR56A).” The detailed procedure is as follows:
Employer’s return forms: Employers can download the required forms from the IRD website. However, it is worth noting that if the employer does not receive the IR56A but has employed staff in that year, they need to actively apply to the IRD to obtain it. Download: Request for Employer’s Tax Return for salaries tax and MPF contributions.
Employer’s Return (IR56A and IR56B): For continuously employed employees, including single persons with a total income of $132,000 or more for the whole year, all married employees, all part-time employees, and directors.
Employer’s Return (IR56E): Employers need to submit one within three months for newly hired employees.
Employer’s Return (IR56F): Employers need to submit one before the employee stops working (or dies) within one month.
Employer’s Return (IR56G): If an employee is expected to leave Hong Kong for a long time or permanently, the employer needs to submit two forms one month before the employee is expected to leave. At the same time, the employer cannot pay any salary to the employee from the date of submitting the form until the employee completes the tax clearance procedures and can present the “Letter of Release” issued by the IRD to release the remaining funds.
Employer’s Return (IR56M): Notice of payment of remuneration to persons other than employees.
Employers need to submit the above five forms (IR56B/IR56E/IR56F/IR56G/IR56M) as required.
Who can sign the employer’s tax return form (IR56 form)?
According to the guidelines of the Inland Revenue Department, the following individuals are considered “authorized signatories”:
Sole proprietors of businesses
First partners of partnership businesses
Directors, company secretaries or managers of corporations, investment managers (only applicable to open-ended fund companies), provisional liquidators or liquidators
Key officers of organizations.
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