Taxes in Hong Kong - Employment

You must let the Inland Revenue Department (IRD) of any changes in employment in your company - hiring, terminating or change of details of employees - all must be reported.

This is to allow the IRD to calculate the right amount of Salaries Tax individuals need to pay, and the correct Profits Tax for corporations..

For the forms IR56B/56E/56F/56G, the company must provide all employees with a copy of the completed forms to facillitate the completion of their tax return.

Hiring

Specimen of Completed IR56E

When you hire someone:

  • Single and employed on a full-time basis, and you anticipate, based on the salary, that the employer is chargeable to Salaries Tax, or
  • Part-time, or
  • who is married, or
  • to act as director

you must fill out a IR56E form within 3 months of the commencement of employment.

For each employer you hire, you must keep records of the following information:

  • Personal particulars - name, address, identity card or passport number with country of issue, marital status
  • Nature of employment - full-/part-time
  • Capacity in which employed - the role in the company (web developer, salesman, director)
  • Amount of cash remuneration - Includes all currencies and overseas remuneration
  • non-cash and fringe benefits
  • employer's and employee's contributions to the Mandatory Provident Fund (MPF) or its equivalent
  • employment contract and amendments to terms of employment
  • period of employment

You must notify the Inland Revenue Department (IRD) of the following:

  • any change in the employee's personal particulars (such as change in residential and postal address, change in marital status)
  • any change in the employee's terms of employment (such as a change from full time to part-time)
  • the Hong Kong Identity Card No. of the employee (if he/she previously did not possess a Hong Kong ID card)

Terminating Employment

Specimen of completed IR56F

When the employment of an employee is terminated, either through resignation, dismissal, or death, you must file one copy of IR56F one month before the date of termination.

In Section 52(5), it states "Provided that the Commissioner may accept such shorter notice as he may deem reasonable". This means a reasonably shorter notice can be acceptable to the Commissioner. For example, in the case of termination due to the death of the employee, it would be unreasonable to expect filing the IR56F one month before, and so it would be acceptable if the notice is given soon after death.

You must also keep records of:

  • Letter of Resignation / Dismissal
  • Notice of Final Payment of Remuneration
  • Employment Visa and Employer’s Notification of Cancellation of Employment Visa (if applicable)
Employee Leaving Hong Kong

Specimen of completed IR56G

If the employee is terminating the employment and intends to leave Hong Kong permanently or for an extended period of time (over one month), then the employee should not file a IR56F, but instead file two copies of IR56G one month before the expected date of departure.

The employer must also withhold remuneration due to the employee, including salaries, commission, bonus, reimbursement of rent/expense, money or money's worth included, for one month after the date of filing of the IR56G. The employer must also provide a copy of the completed IR56G form to the employee.

The employee must approach the IRD to settle all taxes, either by cash, EPS or cashier order at Post Office, or by cheque. The IRD will then issue a tax return form (BIR60), which must be completed and returned. The IRD will then issue a letter of release to both the employer and employee. After receiving the letter of release, the employer must release the payments due to the employee.

Even if the employee is not required to pay any taxes, the IRD must still issue a letter of release so the employer can release the payment due.

If the employer fails to pay his/her taxes, then the IRD can issue a garnishee notice (IR113) to the employer within the one month, where the employer must settle the unpaid taxes using the money withheld.

If after one month, the employer receives no garnishee notice, the employer can release the monies withheld.

The government issued a helpful checklist regarding an Employee About to Leave Hong Kong

Non-Employees

Residents

Specimen of completed IR6036B

Specimen of completed IR56M

If remuneration, such as commission and fees, are paid to residents who are:

  • Sub-contractors exceeding HK$200,000 per annum, or
  • Consultants, agents, brokers, freelance artistes, entertainers, sportsmen, writers or freelance guides etc. exceeding $25,000 per annum

then a IR56M must be filed for each individual, accompanied by a IR6036B declaration form.

Non-Residents

If remuneration, such as commission and fees, are paid to non-residents who arrives to Hong Kong for a brief period to perform his/her services, then you must file a IR623 as soon as the non-resident arrives at Hong Kong.

The company must also withhold sufficient remuneration to the non-resident to cover any taxes due.

Employer's Return

Specimen of Completed BIR56A

Specimen of Completed IR56B

The IRD will send a BIR56A (Employer's Return) and the accompanying IR56B forms on the first working day of April each year.

You must complete it within 1 month even if you hire no employees or the company is not active.

For each employee, the company must also file a IR56B. If a IR56F or IR56G has been filed for that employee already, there's no need to file an IR56B for that employee in the Employer's Return.

FIling of the Employer's Return can be done electronically, which allows you to fill in employer's detail for all forms automatically, as well as sign and submit them all in one go.

If you do not receive the BIR56A, IR56B by mid-April, or other forms such as IR56E, IR56F, IR56G, IR56M and IR6036B, or if these forms got lost or damaged, or if you need additional forms, you can fill in the IR6163 form to request those forms. You can also download some of the forms online.

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