The Employer's Return and IR56 forms

The answer first

Employers in Hong Kong report employees' remuneration to the Inland Revenue Department so that salaries tax can be assessed. The main filing is the annual Employer's Return (BIR56A with IR56B forms), issued around the beginning of April and due within 1 month. Separate IR56 forms are filed when employees join, leave or depart from Hong Kong.

For an employee leaving Hong Kong, the employer must withhold payments from the date of filing IR56G until the earlier of one month or receipt of a letter of release.

At a glance

Employer's Return: Issued around early April; file within 1 month
New employee: IR56E within 3 months of starting
Leaver staying in Hong Kong: IR56F at least 1 month before the last day
Employee leaving Hong Kong: IR56G at least 1 month before departure

The forms

Form	When	Deadline
BIR56A + IR56B	Annual return of remuneration for the year to 31 March	Within 1 month of issue
IR56E	New employee likely to be chargeable, or a director	Within 3 months of commencement
IR56F	Employee ceasing employment and remaining in Hong Kong	At least 1 month before the last day of employment
IR56G	Employee leaving Hong Kong for more than 1 month	At least 1 month before departure
IR56M	Fees and commissions paid to persons who are not employees	With the annual return when required

What counts as remuneration

Salary, wages, bonuses, commissions, director's fees and allowances.
Housing benefits, including the rental value of accommodation provided.
Share awards and options, when they are taxable.
Payments in lieu of notice and certain termination payments.
Benefits that can be converted into money.

Key takeawayA return must be filed when issued even if the company had no employees during the year. Report "nil" rather than ignoring the form.

Departing employees

File IR56G at least one month before the employee's expected departure.
Withhold all payments due to the employee from the date of filing.
Release the funds on the earlier of one month passing or receipt of a letter of release from the Department; in practice, most employers wait for the letter.
Provide the employee with a copy for their own filing.

Penalty exposureFailure to file the Employer's Return or IR56 forms without reasonable excuse can lead to a fine of up to HK$10,000 and, for IR56G cases, liability for tax that should have been withheld.

Questions we are often asked

We had no employees this year. Do we still file?

Yes. If the Inland Revenue Department issues an Employer's Return, it must be completed and filed, even if it shows no employees.

Do we need to file IR56E for a part-time employee?

An IR56E is required for a new employee who is likely to be chargeable to salaries tax, or who is a director. If in doubt, file it; it avoids later queries.

What if an employee leaves Hong Kong suddenly?

File IR56G as soon as you become aware of the departure, explain the circumstances, and withhold payments from the date of filing as required. Contact us immediately.

How DBMS Global can help

Preparing and filing Employer's Returns and all IR56 forms.
Tracking joiners, leavers and departures through payroll.
Advising on taxable benefits and reporting.

In summary

File the Employer's Return within 1 month of issue.
IR56E, F and G for joiners, leavers and departures.
Withhold pay for departing employees as required.

Official references

Inland Revenue Ordinance (Cap. 112), section 52
Inland Revenue Department: Employer's Return and IR56 forms guidance, www.ird.gov.hk