What is the Hong Kong Employer’s Return? BIR56A and IR56B Explained

Whether you have recently started a company in Hong Kong or are looking to set up a business in the metropolitan, complying with the local employment laws is vital. Here is a close look at the obligations of an employer in Hong Kong, including the filing of an employer’s return of remuneration and pensions and what you need to know about the BIR56A and IR56B forms.

What Is the Employer’s Return Form?

The Employer’s Return of Remuneration and Pensions or Employer’s Return – also known as Form BIR56A – refers to the annual reporting of salary and other benefits employees receive and should be submitted together with Form IR56B. All business owners or employers registered in Hong Kong are required to submit this document to the IRD (Inland Revenue Department). If you employ staff as an owner of a company in Hong Kong, you have to:

  • Report to the IRD how much employees earn;
  • Maintain payroll records.

The BIR56A acts as a cover letter to the submitted IR56B forms, and the IR56B forms you submit should tally with the number of employees you have hired.

The BIR56A form displays the following information:

  • The company’s name
  • Postal and business address
  • The name of the person who compiled the employer’s return of remuneration and pensions
  • The number of submitted IR56B forms
  • Format submitted on – online, hardcopy, or mixed

The BIR56A form displays the following information:

  • Employee’s personal particulars, including name, identity card/passport number along with the place of issue, residential address, marital status,
  • Employee’s job title
  • Benefits amount (e.g. allowance, bonus, housing benefits, education benefits of the employee’s child/children, etc)
  • Employee’s gross salary before any deductions, such as MPF contributions or other recognised retirement schedmes
  • Additional non-cash benefits offered to employees such as vacation allowances, accommodation, shares or stock options.

What is The Definition of “Employee”?

According to the IRD, an employee is defined as a person employed by a Hong Kong company, including:

  • Full-time or part-time employees
  • Hong Kong residents or non-Hong Kong residents, and
  • Persons who provide services in or outside Hong Kong

Payroll Records For Filling Employer’s Return

To ensure the employer’s return of remuneration and pensions is accurate, you need to maintain payroll records and keep them for seven years at a minimum. You should start recording the following details as soon as you hire an employee:

  • Personal particulars, including name, identity card, address, marital status, passport number, along with the place of issue.
  • Job title
  • Nature of employment – part-time or full -time.
  • Amount of salary the employee receives in foreign and domestic currency. This should include any salary paid outside of HK.
  • Additional non-cash benefits provided to employees such as vacation allowances, accommodation, shares or stock options.
  • Contributions to the MPF by employers and employees.
  • Employment contract.
  • Amendments made to terms of employment.
  • Period of employment.

What Is the Yearly Obligation of Employers Regarding the Salary?

According to HK IRD, annual tax reporting is from April of the last year to March of the year. Take 2024 as an example: this year’s employer’s returns of remuneration and pensions (Form BIR56A) for the year ended on 31 March 2024 will be issued in early April 2024. Employers are required to complete and submit the BIR56A and IR56B to the IRD within one month from the date of issue of the return.

If the employer is unable to submit the BIR56A and IR56B before the deadline, he/she may apply for an extension. Approval of the extension, however, is at IRD’s sole discretion.

What Is the Penalty for Missing the Deadline?

The IRD imposes stringent penalties for late or inaccurate submissions. According to the IRD website, businesses can face a fine of HKD 10,000 if they fail to submit the annual IR56B. Additional tax may also be applicable. Late or incorrect filing of the employer’s return is a costly mistake that can have long-term consequences. Not only will the company’s reputation suffer, the business may also face difficulty in securing funding, partnerships or other business opportunities in the future. Hiring an in-house team to help with filing is not always the most strategic and financially beneficial option for businesses, leading to high overhead costs and possible turnover. To ensure your filing of the employer’s returns is done professionally and in a timely manner, without fear of penalty or legal liabilities, many companies have opted for outsourcing HR functions, either partly or completely. Outsourcing HR responsibilities to a local, experienced, reliable team is cost-effective and hassle-free and is suitable for companies who do not have dedicated resources to be on top of all HR requirements..

A Quick Guide to Filing the Employer’s Return of Remuneration and Pensions

Before filing the employer’s return, ensure the payroll and employee information are accurate for the current year. The forms can be submitted in physical, hard copy form, or online.

Online submission

To submit your employer’s return online, you first need to create an account on eTAX, IRD’s online services. The company’s authorised signer is the person responsible for creating an eTAX account and submitting duly signed returns. Authorised signers include:

  • The proprietor in the case of a sole proprietorship
  • Precedent partner in case of a partnership
  • Director, company secretary, manager, or a liquidator
  • The principal officer in case of a group of persons
  • Agent for non-resident person

Employers can either directly key in on IR56B forms, as well as the ‘cover letter’ (BIR56A form) one by one online or upload a prepared data file.

After the recent enhancement of the electronic filing of employer’s return by the IRD, the IR56 Forms Preparation Tool can prepare up to 2,000 sets of IR56B forms while uploading capacity to transmit data file is expanded to 5,000 sets of IR56B records for each upload.

Submitting Forms Physically

Both forms in hard copies

The IRD accepts the forms it issues or the forms downloaded from the IRD website. These forms have to be signed by the same responsible person. The downloaded IR56B form must be printed on white plain A4 size paper and the printed information must be legible and complete.

IR56B in softcopy and IR56A in hardcopy

If you submit an e-copy of the the IR56B form, a signed hardcopy of the Control List is required to be submitted along with a signed BIR56A.

Mixed Mode

This method was introduced to facilitate filing without using the eTAX account of the Authorised Signer. Any person the employer appoints can upload the data files. Once these files are uploaded successfully, a Control List paper containing a QR code and Transaction Reference Number is generated. The Authorised Signer needs to sign the Control List and submit it to the IRD.

Smart Payroll Management Solutions

Employers have multiple obligations related to payroll record keeping and reporting that require considerable investment in time, money, and dedicated manpower. Outdated or heavily manual payroll management is costly for business operations and is prone to human errors. In order to compile with labour law requirements and to streamline business efficiency, businesses should consider smart payroll management solutions to help with filing of the employer’s return in Hong Kong.

As a leading HR outsourcing partner, Links offers all-in-one payroll service featuring consolidated reporting, smart payroll dashboard capabilities, multi-country payroll, leave, and benefits management. Rely on our seasoned payroll experts to handle the complex tasks of maintaining updated payroll records that ensure you submit the employer’s return of remuneration and pensions on time and accurately. Get in touch with us to know more about how we can help your business!

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