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Hong Kong Year-End Tax Preparation – 3 Golden Rules

Staying ahead of the payroll game is no easy feat. To stay compliant, they need to understand the impact of legislative changes on processes and statutory calculations and contributions. At the same time, HR also need to know how to manage the complexities of a remote or hybrid workforce. It is getting close to the period where Hong Kong employers need to submit their employees’ year-end tax (IR56B) by end of April. It’s time to start preparing for this activity which is coming soon in the next two months. Despite the challenges, though it’s hard to spare time for tax preparation, it is not impossible. Here are three golden rules that can help you on your year-end tax preparation. Let us break down this activity into steps to make year-end tax filing a hassle-free experience.

Rule 1: Get your employee’s personal information updated

You do not want to run into error when submitting the tax to The Inland Revenue Department (IRD) because of missing employee’s address and postal code. These data is required for tax filing. Clean up and update all the employee’s data in the payroll software. Download your employee master report and check for missing data such as addresses. If there is your payroll software support bulk upload function on employees’ data, it will be a time saver instead of individual data entry.

Rule 2: Ensure year to date payroll data is correct before tax processing

Before migrating your April to March payroll data to the tax system for processing, it is important that you check through the year-to-date payroll report first. Verify that all the data is correct, if there are any changes, make the changes first before processing tax. It is important to get it right at the first time so that the value on the tax forms are reflected accurately. One easy way to check is to download the payroll history report from your payroll system, where most HR will use the year-to-date report that breakdown all the payments in each month for each employee to perform verification.

Rule 3: Know the different modes of tax submission

Employers can complete IR56B directly online through IRD’s eTAX. Supplementary, replacement or additional IR56B can also be submitted via the e-filing of Employer’s Return service under eTAX. If you need a bulk upload of the electronic IR56B XML file format, you can download this file from the payroll system. Here is the user guide by IRD on how to enter the details through eTAX. If you are doing e-filing, you need to know your tax reference number, refer to your Annual Employer Return to retrieve that reference number. Here is a specimen of the Annual Employer Return.

For hardcopy submission, employers need to ensure each IR56B paper forms has to be duly signed by the same responsible person who signed the BIR56A. The IR56B form must be those provided by the IRD or downloaded from the IRD website or obtained from the Fax-A-Form Service. The download form and fax-a-form must be printed on white plain A4 size paper; and the printed information must be complete and legible.

So, how can businesses stay ahead of payroll complexities? You can reach out to us and speak to our consultant to learn more on our payroll solutions and other time-saving tools you need to grow your business.


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