IR56B and BIR56A Forms: An Intro to the Employer’s Return Forms
Employer’s Return forms, commonly recognised as BIR56A and IR56B in Hong Kong, are crucial documents that require accuracy and timely submission to the Inland Revenue Department (IRD).
What are the IR56B and BIR56A forms (Employer’s Return)?
Employer’s Return forms act as a testimony to an employee’s and director’s income and benefits over the fiscal year. The BIR56A and IR56B forms encapsulate the earnings and benefits provided to employees and directors, assisting the IRD in ascertaining the individuals’ tax position and calculating the precise tax obligations.
All employees’ and directors’ income, regardless of whether they worked in Hong Kong or overseas and whether they are Hong Kong tax residents or not, is generally required to be reported through the forms BIR56A and IR56B.
This form acts as a cover letter to all IR56B forms that an employer would submit. It includes the company’s name and address, name of the officer who compiled the Employer’s Return, number of IR56B forms completed, and the format of submission (hardcopy, online or mixed).
Each employee/director’s income and benefits are detailed in this form, providing a breakdown for the IRD. It states the employee/director’s personal particulars, position in the company and all received salary, benefits and pensions (remuneration package).
By meticulously documenting this information, employers contribute to a transparent and equitable taxation system.
Timeline for Submission
The IRD sends employers the BIR56A and IR56B forms usually on the first working day of April each year. Submissions are typically due within one month from the date of issue.
Employers are encouraged to mark this period in their calendars to ensure timely compliance.
The year of assessment is 1 April – 31 March.
Generally, all Hong Kong companies receive the BIR56A and IR56B forms from the IRD, irrespective of whether they have any employees, have not commenced or have terminated operations during the assessment year.
Having said that, some Hong Kong companies may not receive the Forms from the IRD every year due to their inactive status or no remuneration payment to employees/directors in the past.
Kindly note however that if companies have remuneration paid/accrued to their employees or directors during a tax year but do not receive the BIR56A form for that tax year from the IRD, they are obliged to voluntarily prepare and submit the IR56B forms to the IRD to report the remuneration made.
Newly incorporated companies generally receive their BIR56A form about 3-6 months after the company files its first audit.
Preparing the Forms
Gather the necessary information: Collate all data regarding employees’ earnings, benefits, and personal details for that year’s year of assessment.
Verify the accuracy: It is prudent to double-check the information for any inconsistencies or errors. It is important to ensure that the income and benefits have been accurately and completely reported in the IR56B forms.
In case companies provide certain special kinds of benefits, such as housing benefits, share options, share awards, severance payments, termination payments, to their employees/directors, they need to pay extra attention on whether and how the said benefits should be reported in the IR56B forms.
Also note that even if employees or directors would like to claim their income as tax exempt under Hong Kong salaries tax, employers still need to report their income in the IR56B forms. That is because the IRD determines whether the income can be tax exempt.
Moreover, the IRD may compare the amount of remuneration between the IR56B forms and the audited financial statements. It may raise enquires to the companies for the reasons for the discrepancies.
Seek professional advice: If necessary, consulting with a taxation expert can provide clarity and ensure the accuracy of the forms.
The IRD provides an online platform for the submission of Employer’s Return forms (ER e-Filing Services). There are 2 modes of submission: 1. Online mode and 2. Mixed mode.
The online mode is fully online and requires an eTAX Account by an Authorized Signer, so they can submit and sign online.
The mixed mode allows employers to designate a person to upload a data file containing the IR56 records via the ER e-Filing Services without the login of the Authorized Signer’s eTAX Account. After the file upload, a Control List will be generated by the system, which subsequently needs to be signed and submitted by the Authorized Signer.
More information on the ER e-Filing Services can be found on the website of the IRD.
Adhering to the statutory obligations concerning the submission of Employer’s Return forms is paramount for every employer. Understanding the process, preparing the documents accurately, and submitting them on time will contribute to a seamless taxation process, benefitting both the employer and the employee.
HKWJ Tax Law can help
Keeping track of the documents required for compliance with Hong Kong’s corporate governance rules can indeed be a demanding task. Among these, the Employer’s Return forms (IR56B and BIR56A) are a crucial piece of the puzzle.
If the paperwork is becoming too much for you and/or you are uncertain whether and what income and benefits need to be reported in the IR56B forms, a professional service provider like HKWJ Tax Law can help.
We have a team of tax experts ready to assist you, so you can keep your focus on growing your business. Contact us via the form below or WhatsApp +852 5110 3944 for more information.