Do I Need to File an Employer's Return in Hong Kong With No Employees?

If you run a Hong Kong company with no employees, you generally don't need to file an Employer's Return. However, if the Inland Revenue Department (IRD) sends you the form (BIR56A), you are legally required to submit it as a "Nil" return within one month to avoid penalties.

Received a Hong Kong Employer's Return But Have No Staff? Here's What to Do

You’re a solo founder, running your new Hong Kong company from your laptop a thousand miles away. You have no office, no staff, and definitely no one on a Hong Kong payroll. Then, an official-looking envelope from the Hong Kong Inland Revenue Department (IRD) arrives.

It’s an "Employer's Return of Remuneration and Pensions," Form BIR56A, demanding you report the income paid to all your employees.

Panic sets in. Did you miss a step? Are you accidentally non-compliant? Is the IRD about to hit you with fines?

It's a scenario we see play out with our international clients all the time. They've been told Hong Kong is simple, and then a form arrives that seems totally irrelevant to their one-person, global operation. The good news is that the solution is simple, but it requires understanding a fundamental rule of dealing with any tax authority: you can't ignore them.

The Short Answer to a Common Panic

First, take a breath. If your Hong Kong company genuinely had no employees during the tax year, you usually do not have a proactive duty to request and file an Employer's Return. The system is logical; no employees means no employee remuneration to report.

However—and this is the critical part—if the IRD issues you an Employer’s Return (Form BIR56A), you are legally obligated to respond. The act of them sending you the form triggers a compliance requirement. You can't just throw it away assuming it's a mistake.

Instead, you must complete and submit the form as a "Nil" return. This simply means you are formally notifying the IRD that you had no employees and paid no reportable remuneration during that tax year. It's a simple, administrative step, but it's a mandatory one.

The Golden Rule We Tell Every Client: Never Ignore a Tax Form

The biggest mistake a founder can make is assuming a seemingly irrelevant form doesn't apply to them. In the eyes of the IRD, an issued form is a direct request for information, and failing to respond is a compliance breach.

When a client forwards us a BIR56A form, our advice is immediate and unwavering: we must file it.

Here's why this is so important:

• The One-Month Deadline: An Employer's Return must be filed within one month from the date of issue. Missing this deadline can lead to warning letters and, eventually, financial penalties, even if you owe no tax.

• It's About Compliance, Not Tax Owed: The IRD's penalty for late filing isn't for tax evasion; it's for the failure to comply with a statutory request for information. Filing a Nil return on time is the easiest way to stay in good standing.

  
  

• Maintaining a Clean Record: For any business, but especially one operating internationally, maintaining a flawless compliance record is crucial. It affects everything from your relationship with the tax department to your ability to work smoothly with banks and other financial institutions.

Handling this correctly demonstrates that your company is well-managed and takes its legal obligations seriously, which is a signal of quality to the entire business ecosystem.

"But I Pay Myself!" — The Critical Difference Between a Director and an Employee

This is the next point of confusion for most solo founders. "I pay myself from the company, so aren't I an employee?" For a non-resident founder working entirely outside of Hong Kong, the answer is typically no.

Hong Kong's tax system makes a clear distinction between different types of payments, and for a foreign director, this distinction is key:

• Non-Resident Director Working Remotely: If you are the director of your Hong Kong company but live and perform all your work outside of Hong Kong, you are generally not considered an "employee" in the context of Hong Kong payroll. Your company does not need to register for a Hong Kong payroll or make Mandatory Provident Fund (MPF) contributions for you.

• Salary vs. Dividends:

  • Salary/Director's Fees: If you pay yourself a "salary," it's considered income for services rendered. However, since your services are performed entirely outside of Hong Kong, this income is sourced offshore and therefore not subject to Hong Kong Salaries Tax. It wouldn't be reported on an Employer's Return in the same way a local employee's salary would be.

  • Dividends: A dividend is a distribution of company profits to you as a shareholder. Hong Kong does not tax dividends. This is not employment income and is never reported on an Employer's Return.

For most non-resident founders, paying themselves via dividends is the simplest and most tax-efficient method within the Hong Kong system. Since neither of these payment methods constitutes a Hong Kong-based employee's salary, they do not trigger the need to file a detailed Employer's Return with IR56B schedules.

Decoding the IRD's "Alphabet Soup": Which Forms Matter to You?

The Employer's Return system involves a few different forms, but for a zero-employee company, you only need to worry about one.

• Form BIR56A: This is the main cover sheet and the declaration. When filing a Nil return, this is the form you complete, indicating you have nothing to report, and sign.

• Form IR56B: This is the individual schedule for each employee, detailing their total remuneration. If you have no employees, you do not submit any IR56B forms.

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  Event-Driven Forms (IR56E, F, G): These forms are for reporting specific events: hiring a new employee (IR56E), an employee ceasing employment (IR56F), or an employee leaving Hong Kong (IR56G). Since you have no employees, these forms are not relevant to you.

  
  

The process is simple: if you receive a BIR56A, you complete that single form as "Nil" and send it back. That's it.

The Proactive Move: How to Stop Getting the Form for Good

Receiving and filing a Nil return every year is a minor administrative task, but it's still a task. A more efficient, long-term solution is to get your company off the IRD's "potential employer" list.

If the IRD continues to send you a BIR56A each year, it simply means their records indicate that you might be an employer. The best practice, and what we proactively do for our clients in this situation, is to formally notify the IRD.

We help our clients draft a simple letter to the IRD stating that the company has no employees in Hong Kong and does not intend to hire any in the near future. The IRD can then update its records and will typically cease to automatically issue the Employer's Return each year. This simple, one-time action can save you from a recurring annual task and any potential anxiety about missing a deadline.

This is the difference between reactive and proactive compliance. It's about anticipating issues and streamlining your administrative burden so you can focus entirely on growing your business. Hong Kong's system is efficient, but it runs on clear communication. A simple notification can make all the difference.