Tax is a key part of the business that every potential business owner in Hong Kong needs to be familiar with. You need to understand all relevant information to set up or expand your business into the Asian market via Hong Kong.
One of your obligations as an employer in Hong Kong is the employer’s tax return. To that end, here is everything you need to know about an employer’s return Hong Kong.
Employer's Return Hong Kong: What Is The Employer’s Return Form (IR56B)?
The Employer’s Return of Remuneration and Pensions is popularly known as the employer’s return Hong Kong. The IR56B is one of the forms employers receive annually from Hong Kong’s Inland Revenue Department (IRD), sent out in April.
The IR56B is used to determine employee salaries, aiding in tax assessment for the previous year. In keeping with this theme, the IR56B will contain information about the employee, payment information and nature of employment.
You are required to provide any payment information relating to all your employees. Fringe benefits, bonuses, allowances, overseas income and any other payment from the company must be disclosed in the form.
Any employer with a registered business in Hong Kong is mandated to fill out this form. You will be required to fill an IR56B for everyone in your employ. The details expected in the form include:
- Employee ID details
- Employee address
- Residential address
- Marital status
- Standard salary
- Bonuses, incentives and financial gifts
In keeping with the IRD’s mandate of providing accurate information, your company must maintain employee payroll records. The payroll records serve as proof that all the information filled out in the employer’s return is accurate.
To protect your company from penalties, verify all payroll records are intact and accurate before filing. Once you are set to file, you have two options: online submission or in-person submission.
Employer's Return Hong Kong: 3 Ways To Submit Your Return
1. Online Submission
The IRD has an online portal dedicated to the internet submission of forms known as eTax. The first thing you need to do is create an account on this platform. The company’s authorized signatory must create the account and will fill out and sign all returns.
Members of the company qualified to be authorised signatory include: Sole Proprietor, Director, manager, company secretary, Precedent partner, and Principal officer. The principal officer is usually determined based on the type of company.
You can either fill the form directly online using direct keying or upload a downloaded copy of the IR56B after filling it out. You can also create a data file personally, using a data tool of your choice, including a self-developed tool, provided it meets departmental specifications.
Notable approved software tools acceptable to the IRD include IR56 Forms Preparation Tool (including IR56B and IR56F forms) and IRD IR56B Software – IR56B.
Companies with employees over 800 can still submit individual IR56B forms online. You cannot, however, submit more than 800 data files.
2. Physical Submission
You can physically submit your company’s IR56B forms at the IRD offices closest to you. Forms sent out for filing or those downloaded on the IRD’s website are acceptable.
The form will need to be signed by the appropriate parties before submission. The IRD accepts both softcopy and hardcopy submissions.
3. Mixed Submission
The IRD also has a mixed submission option, requiring an uploaded IR56B form and an in-person submission. This newly introduced method was first implemented in 2018, designed to allow unauthorized company signatories to complete the employer’s return Hong Kong.
Here, an employer appointed by the authorized signatory will upload the data files and generate a form which the authorized signatory will sign. The signed form will be submitted in person at the IRD office.
Employer's Return Hong Kong: What Happens If You Don't File Employer’s Return On Time?
The IRD is responsible for all filing of the employer’s return Hong Kong and is strict on promptness. Failure to file on time or providing incorrect details will attract serious penalties.
The standard penalty for a late employer’s return filing or no submission is an HKD10,000 fine.
Employer's Return Hong Kong: How Can We Help?
The employer’s return Hong Kong is compulsory for all companies in Hong Kong and carries serious penalties for a breach.
New companies will only be eligible to start filing returns eighteen months after they are incorporated. Keep all payroll records in this period, as they will be needed when filing starts.
SJH Global provides consultancy services to new employers or those seeking help with the employer’s return Hong Kong and more. We also offer other taxation services like filing returns on your behalf, preparing payroll records, and serving as tax representatives.
Our services are designed to make the tax process easier for our employers, allowing you to focus solely on your business.
Employer's Return Hong Kong - Frequently Asked Questions
The deadline for filing an employer’s return Hong Kong is within one month. From the date filing returns are sent out, you have one month to complete and submit your IR56B. The returns sent out usually contain the deadline, but you have a month to comply if it doesn’t.
For those unable to meet the deadline for filing the employer’s return Hong Kong set forth by the IRD, you can always apply for an extension. Send a written request to the IRD for an extension, ensuring it can be processed before the pre-set deadline or face the lateness penalty.
You will need to inform the IRD of your reason for needing an extension for filing the employer’s return Hong Kong and submit valid proof to back it up. If your application is successful, you will be issued a new deadline.
The employer’s return Hong Kong applies to every company in Hong Kong, regardless of structure or company type. The submission rules may differ from one company type to the next, but compliance with the employer’s return is non-negotiable.
Be sure to familiarize yourself with the regulations of filing the employer’s return Hong Kong that apply to your company to ensure you aren’t violating any laws. You can hire experts like SJH Global to help make the process easier.
You will still need to file an employer’s return Hong Kong, but you will simply declare all employee details null, providing documents to back it. The same applies to businesses yet to commence or cease operation.
Failure to file the employer’s return Hong Kong even under these circumstances will attract the standard penalties. Be sure to comply with all the rules to ensure you aren’t filling out any sections incorrectly.
