What tax obligation do I have as an Employer?

Keeping payroll records
Reporting remuneration paid to an employee
Examples

Keeping payroll records

1.	Your tax obligations commence when you hire the first employee

2.	On hiring the employee, you have to maintain a record of that person's :

	(a)	personal particulars (name, address, identity card or passport number with place of issue, marital status)

	(b)	nature of employment (full time or part-time)

	(c)	capacity in which employed (e.g. sales manager, salesman, worker, in-house lawyer, accountant, director)

	(d)	amount of cash remuneration (regardless of denomination in domestic or foreign currency and remuneration paid outside Hong Kong)

	(e)	non-cash and fringe benefits (such as quarters, holiday journey benefits, share award, share option)

	(f)	employer's and employee's contributions to the Mandatory Provident Fund (MPF) or its equivalent

	(g)	employment contract and amendments to terms of employment

	(h)	period of employment

3.	You have to inform the Inland Revenue Department ("IRD") the following:

	(a)	any change in the employee's personal particulars (such as change in residential and postal address, change in marital status)

	(b)	any change in the employee's terms of employment (such as a change from full time to part-time)

	(c)	the Hong Kong Identity Card No. of the employee

4.	Business owners are required to keep business accounting records, including payroll records, for at least 7 years. For details of what and how records should be kept, see

		A Guide to Keeping Business Records

		Admissibility of Business Records Kept in Electronic Form for Tax Purposes

Reporting remuneration paid to an employee

General

(1)	When you received an Employer's Return (BIR56A), you must complete it and lodge with IRD within 1 month even if
	you do not hire any employee (please tick the Box "NO" in the BIR56A),
	the business has not commenced, or
	the business has ceased.

(2)	If you have employed persons who meet the conditions stated in item 1(a) of Notes and Instructions for Form BIR56A but do not receive an Employer's Return for the year of assessment 2023/24 by mid April 2024, you should request the IRD to issue a return. Click here for more information.

(3)	A copy of the completed IR56B/56E/56F/56G should be provided to the employee concerned so as to facilitate the correct completion of his/her tax return. Also see Obligations of An Employer (IR56H)

The Hong Kong Identity Card No. of the employee

If at the time when you complete your Employer's Return, an employee does not possess a Hong Kong Identity Card, e.g. the employee was recruited from overseas or seconded from an overseas corporation, you can fill in his/her passport number with place of issue. After filing the Employer's Return, you have to follow up with the employee. You should, soonest possible, write in to inform the IRD when the Hong Kong Identity Card No. of the employee is known.

Continuous Employment

You have to report the employee on your Employer's Return (BIR56A and IR 56B) for 2023/24 if he is

(a)	single and paid an annual income of $132,000 or more

(b)	married (regardless of amount)

(c)	a part-time staff (regardless of amount)

(d)	a director (regardless of amount)

New employment

You have to file one copy of IR56E or via Electronic Filing of Employer's Return within 3 months of employing a person if you anticipate that the employee is likely to be chargeable to Salaries Tax.

See Example 1

On termination of his service (or death)

You have to file one copy of IR56F or via Electronic Filing of Employer's Return one month before the date of termination of his employment.

See Example 2

On his leaving Hong Kong for good or for a substantial period of time

(a)	You have to ascertain from the employee his expected date of departure.

(b)	You have to file two copies of IR56G or via Electronic Filing of Employer's Return one month before the expected date of departure.

(c)	From the date of filing IR56G and until such time the employee has made tax clearance and can produce to you a " letter of release" issued by the IRD, you should withhold all amounts due to be paid to him (including salaries, commission, bonus, reimbursement of rent/expense, money or money's worth included).

(d)	See
		Example 3

		Tax Clearance - Things to be done/noted by Employer and Employee (IR6158)

		You or your employee is going to leave Hong Kong (What are you required to do under the tax law?)

Examples

Example 1

On 3 of April 2023, Company X employed a bookkeeper, Ms Mary CHAN.

For this new employee, if she is likely to be chargeable to Salaries Tax, Company X has the following obligations:

(a)

Filing of IR56E

Company X should file ONE COPY of a completed IR56E or via Electronic Filing of Employer's Return by 3 July 2023.

(b)

Filing of IR56B

Subsequently, on receipt of the annual Employer's Return for the relevant year of assessment in early April 2024, Company X should complete an IR56B, if Mary is on its payroll on 31 March 2024.

If, however, Company X is a new company and does not receive any Employer's Return for that year of assessment by mid April 2024, the Manager of the company should submit form IR6163 and ask for the issue of an Employer's Return for that year of assessment.

Company X should provide Mary with a copy of IR56E and IR56B.

If Mary's annual income does not exceed the basic allowance but she is married, and the income position of her husband is unknown to Company X, Company X should file IR56E and IR56B in the manner described above.

If Mary is single but employed as a part-time staff and Company X does not know whether she has other part-time or principal employment, Company X should file IR56E and IR56B in similar manner.

Example 2

On 5 July 2024, Mr. George LAU terminated his employment with Company Y.

Company Y must ask George to ascertain if he would leave Hong Kong after termination of the employment,

(a)

If no, Company Y should file ONE COPY of completed IR56F or via Electronic Filing of Employer's Return on or before 5 June 2024.

(b)

If yes, Company Y should file TWO COPIES of completed IR56G or via Electronic Filing of Employer's Return and withhold all moneys due to George.

See Example 3 for details

Company Y should provide George with a copy of IR56F.

Please bear in mind that after filing IR56F, Company Y should NOT file any IR56B for that year of assessment for George again. Filing two IR56s in respect of the same income may give rise to charging of tax twice on that income.

Example 3

On 5 July 2024, Mr. Peter WONG terminated his employment with Company Z. Subsequently he left Hong Kong on 8 July 2024 to study in Canada.

	1.	Company Z should file a completed IR56G or via Electronic Filing of Employer's Return in duplicate for Peter on or before 8 June 2024.

	2.	Apart from filing IR56G, Company Z is also required to withhold all amounts due to be paid to Peter (including salaries, commission etc, money or money's worth included) from the date of filing the IR56G.

	3.	Company Z should provide Peter with a copy of IR56G.

	4.	Company Z should advise Peter to approach the IRD to make tax clearance prior to leaving Hong Kong.

	5.	On settlement of his taxes, the IRD will issue a " letter of release". Upon receipt of the release letter, Company Z may release the amounts withheld to Peter.

	6.	If Peter wants the IRD to issue a " letter of release" immediately, he should pay tax by means of cash, EPS or cashier order at Post Office payment counters. Then he should take the receipt to IRD's Collection Office on the 4/F of the Inland Revenue Centre to request for a " letter of release". Please note that IRD staff will normally take 30 to 40 minutes to prepare the " letter of release".

	7.	If Peter pays tax by cheque or mixed payments (e.g. cash and EPS), the " letter of release" will normally be sent by post 10 days after the receipt of cheque or mixed payments.

	8.	Even if Peter is exempt from tax, the IRD will still issue a letter of release upon completion of the tax clearance procedures.

	9.	If Peter fails to pay up his taxes, the IRD will issue a garnishee notice (IR113) to Company Z requiring the company to settle Peter's taxes from the money withheld. Company Z's compliance with the IR113 will constitute a valid defence at court against any claim for non-payment of salaries to Peter.

	10.	Please bear in mind that after filing IR56G, Company Z should NOT file any IR56B for that year of assessment for Peter again. Filing two IR56s in respect of the same income may give rise to charging of tax twice on that income.