What is the Hong Kong Employers Return? BIR56A and IR56B

Whether you have recently started a company in Hong Kong or looking to set up a business in the country, complying with the local employment laws is vital. Here is a close look at the obligations of an employer in Hong Kong, including the employer’s return of remuneration and pensions.

What Is the Employer’s Return Form?

The Employer’s Return of Remuneration and Pensions or Employer’s Return refers to the annual reporting of salary and other benefits employees receive. All business owners or employers registered in Hong Kong need 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 reporting of the employees’ income is done through BIR56A and IR56B forms. The IR56B forms you submit should tally with the number of employees you have hired. The BIR56A acts as a cover letter to the IR56B forms submitted.

The following information needs to be furnished in the IR56B:

  • Personal particulars, including name, identity card/passport number along with the place of issue, residential address, marital status,
  • Job title – such as worker, sales manager, accountant, in-house lawyer.
  • Benefits amount (e.g. allowance, bonus)
  • Basic Salary amount
  • Additional non-cash benefits provided to employees such as vacation allowances, accommodation, share or stock options.

The BIR56A form displays the following information:

  • The company’s name
  • 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.

Payroll Records

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 – such as worker, sales manager, accountant, in-house lawyer.
  • Nature of employment – part or full time.
  • Amount of salary 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, share 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. IRD will issue BIR56A on 1st April and employers are required to complete and submit the BIR56A together with IR56B to IRD within one month.

If the employer is unable to submit the BIR56A and IR56B before the deadline, employers can apply for an extension. Approval of the extension is at IRD’s sole discretion.

What Is the Penalty for Missing the Deadline?

The IRD imposes stringent penalties for late or inaccurate submissions. Businesses face a fine of HKD 10,000 if they fail to submit the annual IR56B.

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

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

If a company has over 800 employees, the employer can upload several data files to IRD (i.e. up to 800 forms for each data file).

The IRD accepts data files created using these tools:

  • IR56 Forms Preparation Tool (including IR56B and IR56F forms)
  • IRD IR56B Software – IR56B annual form along with the employer’s return
  • Pre-approved Self-developed Software – includes the IR56F and IR56B forms

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 secretary, director, managers, or liquidators. Specify in the form if there are persons who come under the scope of Note 1 (a) in the Notes and Instructions. If there are such persons, write the number of IR56B Forms you submitted.

IR56B in softcopy and IR56A in hardcopy

If you submit the IR56B as a softcopy stored in CD-ROM/DVD/USB, a signed hardcopy of the control list is required to be submitted along with a signed BIR56A.

Mixed Mode

In 2018, 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 paper and submit it to the IRD.

Smart Payroll Management Solutions

Employers have multiple obligations related to payroll records keeping and reporting that require considerable investment in time, money, and dedicated manpower. Smart businesses require smart solutions when it comes to payroll management in Hong Kong.

As a leading HR outsourcing partner, Links offers all-in-one payroll solutions 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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