Employer’s Salaries Tax Returns in Hong Kong

When establishing and running a company in Hong Kong, one of the key legal responsibilities for employers is ensuring full compliance with Salaries Tax reporting obligations. Whether you’ve hired a single employee or operate a large team, the Employer’s Return is a mandatory annual filing with the Inland Revenue Department (IRD) that documents compensation paid to staff during the year of assessment.

Understanding and fulfilling this obligation correctly is crucial—not only to avoid penalties, but to demonstrate good corporate governance and maintain a compliant business structure.

This article provides new founders with a comprehensive guide to Employer’s Returns, including who needs to file, what forms are required, the reporting process, and how to manage ongoing compliance throughout the employment lifecycle.

1. What Is the Employer’s Return?

The Employer’s Return of Remuneration and Pensions is the IRD’s method of collecting information about salaries and benefits paid by employers to employees and directors. The filing process begins with Form BIR56A, which summarises the employment situation at your company and must be submitted together with the appropriate IR56 forms for each employee.

This return provides the IRD with the data needed to calculate individual Salaries Tax liabilities and to verify the employer's own tax filings where applicable.

2. Types of IR56 Forms and Their Purposes

Different IR56 forms apply depending on the employment event. Here’s what you need to know:

• IR56B – Submitted annually for every employee and director employed as of March 31st of the assessment year.

• IR56E – Submitted within 3 months of an employee's commencement.

• IR56F – Submitted one month before the termination date of employment.

• IR56G – Submitted one month before an employee plans to leave Hong Kong permanently or for an extended period.

• IR56M – Used to report payments made to non-employees such as freelancers, consultants, or service providers.

Each form must detail total remuneration, including salary, bonuses, commissions, allowances, housing benefits, stock options, gratuities, pensions, and other benefits in kind.

3. Who Must File an Employer’s Return?

Every incorporated entity in Hong Kong that has hired employees, paid directors, or made relevant service payments must file an Employer’s Return, even if the business is dormant or has ceased operations.

Employers must file for:

• Local and overseas employees paid by the Hong Kong entity

• Employees seconded from overseas headquarters

• Directors, shadow directors, and board members

• Part-time, temporary, and contract staff

• Interns and trainees, if compensated

Employers should note that even if no tax is due, the obligation to file remains.

4. Filing Timeline and Compliance Deadlines

The IRD typically issues the BIR56A form to employers on or around April 1st each year. Employers then have one month from the issuance date to complete and return the BIR56A along with all applicable IR56 forms.

Key Deadlines Include:

• IR56E – Within 3 months of employment start

• IR56F – 1 month before termination

• IR56G – 1 month before departure from Hong Kong

• IR56B and BIR56A – Within 1 month of IRD’s issuance in April

Employers who need more time to prepare accurate filings can apply for an extension in writing, although approval is not guaranteed and late filings may incur penalties.

5. Filing Methods: Manual and e-Filing

Employers may submit returns either:

• In paper form, by post or in person to the IRD; or

• Electronically, via the eTAX portal using the Employer’s Return e-Filing Services (ER e-Filing)

e-Filing is increasingly encouraged as it allows for more streamlined, trackable submission, and the IRD provides digital forms and authentication tools to simplify the process.

6. Maintaining Employment and Payroll Records

Employers must maintain accurate records of:

• Employment contracts

• Pay slips and payment schedules

• Employee personal and tax details

• Benefits, bonuses, and housing arrangements

These records must be retained for at least 7 years and should be readily available in case of a tax audit or inquiry from the IRD.

7. Penalties for Non-Compliance

Failure to file Employer’s Returns or submitting false/incomplete information can lead to serious consequences, including:

• Fines of up to HKD 10,000

• Additional taxes imposed by the IRD

• Prosecution for more serious breaches

• Delays in processing staff work visas or renewals

Employers who neglect to file an IR56G prior to an employee’s departure from Hong Kong may be held liable for outstanding taxes if the employee fails to settle their account.

8. Best Practices for Staying Compliant

• Implement a reliable payroll system to track compensation in real time

• Conduct periodic reviews of employment and tax records

• Appoint a qualified tax representative or consultant

• Communicate with employees about their own tax obligations

• Monitor expatriate staff and track departure dates closely

Staying ahead of your Employer’s Return requirements is not just about avoiding penalties, it’s about maintaining good standing as a reputable employer in one of Asia’s most transparent jurisdictions.

How Woodburn Accountants & Advisors Can Support You

At Woodburn Accountants & Advisors, we understand that managing employment compliance in Hong Kong can be overwhelming for new business owners. That’s why we offer tailored support for your Salaries Tax obligations, including:

• Preparation and filing of BIR56A and all IR56 forms

• Ongoing payroll and employee tax advisory

• Tracking and managing expat compliance

• Representing your company before the IRD

• Extension applications and audit readiness

Our expert team ensures you meet your employer filing deadlines accurately and efficiently, giving you the confidence to focus on growing your business.

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Woodburn Accountants & Advisors is one of China and Hong Kong’s most trusted business setup advisory firms.

Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.

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