Payroll Tax Compliance for HK Employers

IR56B (annual salaries return for each employee) must be filed by April 30 each year, covering the year ending March 31. Employers with 10 or more employees must file electronically via IRD's eTAX system.

IR56F must be filed within 1 month after an employee leaves. If the employee is leaving HK permanently, you must also file IR56G at least 1 month before the departure date — and withhold their final salary until IRD clears their tax position.

Taxable benefits include housing (calculated as 10% of other income or actual rent paid, whichever is lower), education (if for employee, not dependants), club membership, and any cash allowances. Non-taxable: medical insurance, MPF employer contributions, and genuine business expense reimbursements.

Yes, all full-time and part-time employees aged 18-64 working in HK must be enrolled in an MPF scheme within 60 days of employment. Casual employees in construction and catering industries are covered by industry schemes.

HK salaries tax applies to income from HK employment. For time-splitting, income is apportioned based on the ratio of HK workdays to total workdays. If an expat spends 60% of their time in HK, 60% of income is HK-taxable. DIPN 10 provides detailed guidance.

Tax equalisation is a policy where the company ensures the expat pays no more or less tax than they would have in their home country. The company pays the actual tax and the expat pays a hypothetical "home country" tax. It's common in large multinational assignments and requires shadow payroll calculations.