How to File a HK Employer’s Return Form BIR56A & BIR56B

What is Employer’s Return in Hong Kong?

If you own a registered company in Hong Kong, filing the Return of Remuneration and Pensions, also known as Employer's Return, is mandatory under law.

This is the annual reporting of the amount of salary and all other benefits that your employees receive.

Here's everything you need to know about how to file the return:

• Employer returns are filed to the Inland Revenue Department through forms BIR56A and IR56B.
• Form BIR56A serves as a cover letter to IR56B forms, and both need to be submitted.
• These forms are issued by the IRD.

The employer also needs to find the requisite number of Form IR56B corresponding to the number of employees on the roll or even in the absence thereof.

Moreover, these forms need to be filed regardless of the employee's income.

That's why the employer must maintain payroll records to report how much the employees earn accurately. 

Apart from BIR56A and IR56B, an employer also needs to submit the following to report the earnings of the employees in Hong Kong:

• IR56E: When hiring a new staff
• IR56F: When the employer terminates the employment contract of an employee or upon the death of the employee
• IR56G: When an employee leaves Hong Kong for a substantial period of time or for good

Who's an Employee?

For the purposes of the Employer’s Return, an employee is defined under Hong Kong tax laws as any person engaged by a Hong Kong company, whether they provide services locally or abroad.

According to the Inland Revenue Department (IRD) of Hong Kong, employees include:

1. Persons employed by a Hong Kong company, including:
2. Full-time and part-time employees
3. Hong Kong residents and non-Hong Kong residents
4. Individuals providing services in or outside Hong Kong
5. Employees assigned or seconded to a Hong Kong company by an overseas holding company or subsidiary, including those providing services within or outside Hong Kong.
6. “Relevant Individuals” under Section 9A of the Inland Revenue Ordinance, referring to:
7. Individuals who provide personal services under employment-like conditions but have structured their work through service companies they own.

Additionally, employers must report remuneration paid to:

• Company directors
• Individuals receiving pensions

Employers should ensure that all relevant employees and officeholders are included in the Employer’s Return to remain compliant with Hong Kong Inland Revenue Department (IRD) requirements.

What Are Your Tax Obligations As an Employer?

The tax obligations commence as soon as you hire the first employee. 

Accordingly, you must maintain a record of that employee's personal particulars, nature of employment, the designation in which the employee is employed, the cash remuneration provided, non-cash perquisites, employer's and employee's contributions to the Mandatory Provident Fund (MPF), or it's equivalent. 

Employers also need to maintain business accounting records, including payroll records, for at least seven years.

In case of any change in the employee's personal details or terms of employment, the employer must inform the Inland Revenue Department as soon as possible.

Filing Form BIR56A and IR56B

Forms BIR56A and IR56B should be submitted to the Hong Kong Inland Revenue Department (IRD) annually.

These forms are issued by the IRD every April 1st and must be submitted within one month.

Form BIR56A 

Here's what you need to provide when you are filling up Form BIR56A:

• Company's name and address
• Name of the officer who is filling up the Employer's Return
• Number of IR56B forms filed up; and
• How the forms have been submitted: in hard copy, online, or a mix of both

Form IR56B

Form IR56B should be submitted for the following employees:

• Employees (including laborers, whether daily paid or otherwise, and employees who have received remuneration through service company arrangements), whether resident in Hong Kong or not, whose total income during a financial year is more than HKD $132,000 (if employed for less than a year, a proportionately reduced amount).
•  Directors, married persons, and part-time employees are likely to have other income chargeable as Salaries Tax, regardless of their income and whether they are residents in Hong Kong or not.
• Employees of any non-Hong Kong company who were assigned or seconded to the company during the financial year for duties in or outside Hong Kong.
• Employees receiving a pension during a financial year.

For Form IR56B, the following details must be provided:

• Employee's personal particulars
• Position/designation in the organization; and
• All salary, benefits, and pension received
• Form IR56B should be submitted in alphabetical order of surnames, followed by other names, and should be marked in numerical order.

While the HK Identity Card No. of the employee is mandatory, the passport number and place of issue can be provided in case the identity card number is not available.

However, the employer must inform the Inland Revenue Department once the HKID number is known.

Freelancers and Form IR56M

If there are any freelancers employed by a company, the remuneration paid to such freelancers should be disclosed in Form IR56M and submitted to the Inland Revenue Department. 

What Is the Timeline for Filing the Forms?

Employers must submit Forms BIR56A and IR56B within the required deadlines. Below is the filing timeline:

What's the Process of Filing?

Once you have filled up the forms, there are different modes of submitting them:

Paper Filing

1. Download the forms from the Inland Revenue Department (IRD) website or obtain them via the Fax-A-Form service.
2. Complete Form BIR56A, ticking YES if employees are reported and specifying:
3. Number of paper IR56B forms submitted
4. Number of IR56B records uploaded via e-filing
5. Obtain wet ink signatures from the appropriate signatory:
6. Proprietor (sole proprietorship)
7. Precedent partner (partnership)
8. Company secretary, manager, or director (corporation)
9. Provisional liquidator or liquidator (corporation under liquidation)
10. Principal officer (body of persons)
11. Authorized agent (for non-resident employers)
12. Submit the signed forms in hard copy to the IRD.

Electronic Filing (eTAX)

Online Mode (Direct Keying)

• Requires an eTAX account (accessible only by the authorized signatory).
• Employers can manually enter employee details directly into Forms IR56B and BIR56A.
• Only one submission per year is allowed using this method.
• A single data file can contain up to 30 IR56B/M forms.

File Upload

• Employers can upload a data file containing up to 800 IR56B records.
• Submission requires using the IRD’s IR56B software or pre-approved self-developed software.

Mixed Mode Filing

• Employers can submit IR56B or IR56F data files without using the authorized signatory’s eTAX account.
• A designated person can upload the forms. Such accounts can also be accessed by an Authorised Signatory such as a director, sole proprietor, or partner.
• Once uploaded, the system generates a Control List containing the Transaction Reference Number and QR code.
• The authorized signatory must sign the Control List and submit it to IRD in paper form to complete the process.
• From April 1, 2024, IRD no longer accepts IR56B records via storage devices—these must be submitted through e-filing.

Is There Any Penalty Due to Non-compliance With Filing Requirements?

Yes, as per the terms of the Inland Revenue Ordinance, if the filing requirements are not complied with, the Commissioner can invoke relevant punitive provisions, depending on the nature of the offense

The Commissioner may, at their sole discretion, initiate prosecution to assess additional tax (which is a form of penalty) in respect of the offense and also impose a fine or order imprisonment. 

Key Considerations for Employers When Filing the Employer’s Return

Employers must accurately report chargeable income when filing Form IR56B as part of the Employer’s Return. Chargeable income refers to any earnings that are taxable under Hong Kong Salaries Tax. Misreporting or omitting taxable income may result in penalties or compliance issues.

What Needs to Be Reported in Form IR56B?

When filling out the Employer’s Return, the following types of employee remuneration must be included:

• Salaries, wages, and director’s fees
• Commissions, bonuses, leave pay, end-of-contract gratuities, and payments in lieu of notice (for income accrued on or after April 1, 2020)
• Allowances, perquisites, and fringe benefits, including holiday journey benefits
• Tips received
• Salaries tax paid by the employer on behalf of the employee
• Value of a place of residence provided to the employee
• Stock awards and share options
• Back pay, gratuities, deferred pay, and payment of arrears
• Termination payments and retirement benefits
• Pensions

Employers should carefully review all income components to ensure full compliance with Inland Revenue Department (IRD) regulations.

Common Mistakes to Avoid

• Underreporting or omitting chargeable income – Ensure all taxable benefits are included.
• Failing to report stock awards or share options – These are taxable and must be declared.
• Incorrectly calculating the value of housing benefits – The IRD has specific guidelines for reporting employer-provided accommodations.
• Late submission – Filing after the deadline may result in penalties.

As the Director of Your Company, Do You Still Need to File Your Own Employer's Return?

Under the law, a company director is an employee of a company.

That's why the details of your earnings and benefits should be submitted as part of the Employer's Return.

Are You Looking for Assistance to Handle the Filing Process?

Needless to say, there's a fair bit of paperwork involved with filing an Employer's Return in Hong Kong.

As a business owner, it may be a lot for you to handle, and that's precisely where Air Corporate steps in! 

We take care of all the formalities so that you can solely focus on growing your business.