![[Employer's Reporting Obligations] What is IR56H? A summary of employer tax obligations and form purposes](https://www.genacct.com/wp-content/uploads/2024/09/20250401094111.webp)
Reporting obligations are often a source of confusion for many business owners. It is often only when they receive the Inland Revenue Department’s (IRD) IRC2820 and the attached IR56H form that they realize the company has not fulfilled its reporting duties as an employer.
For tutorials on Employer’s Return forms BIR56A, IR56B, IR56M, and IR56G, please refer to our previous articles. This article explains employer reporting responsibilities, including the purposes of forms IR56E, IR56F, IR623, IR623P, and IR56H.
Extended Reading: [Employer’s Return] Differences Between BIR56A and IR56B? Filing Taxes for Employees | Employer Reporting Guide
What is Form IR56H?
IR56H is a form number revised by the IRD in July 2022. Its theme is the reporting obligations of employers. It serves to remind companies that if they hire staff, they must submit appropriate employer tax forms at different times and under various circumstances. In some cases, they may even need to withhold a portion of an employee’s salary for tax payment to the IRD.
Why Does a Company Receive Form IRC2820?
When a company has been established for some time but has never submitted any employer reporting forms, or has previously replied to the IRD via BIR56A stating it has no employees, the IRD will issue a “friendly reminder” to check if the company truly has no employees. It also explains that employees must proactively notify the IRD to obtain employer returns under the following circumstances:
1. The employee’s total annual income exceeds the basic personal allowance of $132,000
2. Married employees
3. Part-time employees
4. Company directors
Note: For married employees, part-time employees, and company directors, the company has a responsibility to report to the IRD regardless of the salary amount.
Extended Reading: Company Directors | Differences Between Shareholders and Directors
Employer's Reporting Obligations
In addition to the annual Employer’s Return in April, employers are responsible for proactively reporting employee salaries to the IRD. Different forms must be submitted based on the following employment situations (1):
1. Hiring New Employees
Form IR56E must be submitted within three months.
2. Employees Still Employed as of March 31
Forms IR56B and BIR56A must be submitted on or before April 30.
3. Employee Resignation
Form IR56F must be submitted within one month of resignation.
4. Employee Leaving Hong Kong
Form IR56G must be submitted to the IRD at least one month before the employee’s departure.
Extended Reading: Tax Clearance Requires IR56G! What is Form IR56G? Includes Download Link and Employer Filing Guide
Employer Tax Obligations: Forms and Purposes
Employers should submit different tax forms to the IRD based on the employee or recipient of remuneration, taking into account employment conditions, employee status, and duration of employment.
| Form Number | Form Name | Purpose |
|---|---|---|
| BIR56A | Employer's Return of Remuneration and Pensions | Response to IRC2820 |
| IR56B | Employer's Return of Remuneration and Pensions | Reporting employee wages, bonuses, pensions, etc. |
| IR56E | Employer's Notification of an Employee Commencing Employment | New employees |
| IR56F | Employer's Notification of an Employee Ceasing to be Employed | Employees continuing to reside in HK after resignation |
| IR56G | Employer's Notification of an Employee About to Depart from Hong Kong | Employees leaving HK after resignation |
| IR56M | Notification of Remuneration Paid to Persons Other Than Employees | Response to IR6036A |
| IR6036B | Covering Letter for Notification of Remuneration Paid to Persons Other Than Employees | Reporting service fees for non-employment relationships (subcontractors/consultants) |
| IR6163 | Requisition for Employer's Return of Remuneration and Pensions | Applying for employer tax forms |
Extended Reading: What is IR56M? How to fill out IR6036B? Step-by-step guide (with form download links)
Employer Reporting Obligations: Forms IR623 and IR623P
Form IR623
When non-Hong Kong residents receive remuneration for performing arts or athletic activities in Hong Kong, the payer (employer) must submit Form IR623 upon the arrival of the performers or athletes.
Furthermore, according to Sections 20A and 20B of the Inland Revenue Ordinance (3), tax amounts due to the IRD must be withheld in advance. Download IR623
Form IR623P
When non-Hong Kong residents receive remuneration for providing professional services in Hong Kong (e.g., university lecturers, mediators, and lawyers), the payer (employer) must submit Form IR623P to the IRD.Download IR623P
Employer Tax Obligations
Payroll Records
Salary records including: cash receipts or bank transfer records.
Employee Personal Records
Including: name, address, ID number, marital status, position, and nature of employment.
MPF Records
Payment methods and records of MPF contributions.
Employee Benefit Details
For example: rent allowances and share options.
Employment Contracts
Employment contracts specifying the period of employment and detailed terms.
Submitted Employer Returns
For example: Forms BIR56A and IR56B.
Make 2 Photocopies for Records
One copy serves as the company’s tax expenditure voucher, and the other is given to the recipient as their personal tax income voucher.
Number of IR56M Forms
The page numbers in the top right corner of the forms should start from “900001”.
Frequently Asked Questions
What should I do if I receive Form IRC2820 but the company has no employees?
If the company does not employ any staff, you may disregard it.
What are the consequences if a company fails to file taxes for its employees?
Failure to comply with the statutory employer obligation to report employee salaries is an offense (1) and can result in a fine of $10,000.
Does a company need to file an employer's return when paying dividends to shareholders?
No. Dividends received by shareholders are neither wages nor service fees; therefore, employers do not need to fill out employee tax returns for dividends. Extended Reading: Company Dividend Distribution
Q: What is IR6036C?
A: IR6036C contains the notes and instructions for Form IR56M.(2)
Conclusion
Employer reporting obligations refer to the company’s requirement to report employee salaries and other relevant information to the IRD. Form IR56H is a document issued by the IRD to remind companies to fulfill this duty, specifically targeting companies that have not submitted an Employer’s Return, who will receive Form IRC2820 as a reminder.
Companies must submit corresponding employer tax forms, such as IR56E, IR56B, IR56F, and IR56G, depending on whether an employee is joining, currently employed, resigning, or leaving Hong Kong.
General Accounting has been established for over 20 years, providing tax filing services (Trust or Company Service Provider License No.: TC002940). If you have any questions regarding employer tax forms, our professional customer service managers can provide a free preliminary tax consultation.
Further reading:
When to Receive Tax Returns? A Summary of Tax Months, Personal/Corporate Filing, and Tax Extensions
Sources
1. Inland Revenue Department – Employer’s Reporting Obligations
https://www.ird.gov.hk/eng/pdf/ir56h_e.pdf
2. Inland Revenue Department – What are the Tax Obligations of an Employer
https://www.ird.gov.hk/eng/tax/ere_obl.htm
3. Taxation of Persons Chargeable to Profits Tax on Behalf of Non-residents
https://www.ird.gov.hk/eng/pdf/dipn17.pdf
