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Hong Kong Company Formation: Obligations of Employers under the Inland Revenue Ordinance

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Obligations of Employers under the Inland Revenue Ordinance

Section 52(2)

An employer must furnish, within a reasonable time stated in the notice given by an assessor, a return containing the particulars of all persons employed by him who are likely to be chargeable to Salaries Tax, or any other person employed by him as named by the assessor.

Section 52(4)

An employer is required to furnish, within 3 months of engagement, particulars of any new employee who is likely to be chargeable to Salaries Tax.

Section 52(5)

An employer must notify the Commissioner of Inland Revenue in writing not less than 1 month before the termination of service of any employee who is likely to be chargeable to Salaries Tax.

Section 52(6)

An employer must, not later than a month before the employee actually leaves, notify the Commissioner of Inland Revenue in writing whenever an employee who is chargeable to Salaries Tax is about to leave Hong Kong for more than a month. This does not apply to an employee who is required, in the course of his employment, to leave Hong Kong at frequent intervals.

Section 52(7)

An employer who is required by section 52(6) to give notice to the Commissioner of Inland Revenue the expected departure of an employee must not, except with the consent in writing of the Commissioner, make any payment to the employee for a period of 1 month from the date of that notice.

Personnel if employed or treated to be employed under section 9A of the Inland Revenue Ordinance, or holding an office are chargeable to Salaries Tax, employers are required to report their earnings even if these are made by way of a variable commission.

Freelance brokers holding no set office and not bound in a master-servant employment relationship are held to be carrying on business and to be chargeable to Profits Tax. Persons employing such agents need to give details of commissions they pay and employers making Employer’s Returns are required to include this information in Form IR56M. Penalties may be imposed on taxpayers/employers who, without reasonable excuse, fail to comply with requirements of the Inland Revenue Ordinance.