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Global Payroll: Regional Focus Global Payroll: Regional Focus

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Global Payroll: Regional Focus - PPT Presentation

Presented by Kira Rubiano Date October 2017 2 Speaker Kira Rubiano Senior Partner Management Specialist Celergo Global Payroll Kira Rubiano krubianocelergocom 847 5122627 3 ID: 808441

compliance payroll funding tax payroll compliance tax funding europe local bank asia latin timing set pacific america mea countries

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Slide1

Global Payroll: Regional FocusPresented by: Kira RubianoDate: October 2017

Slide2
2

Speaker

Kira Rubiano

Senior Partner Management Specialist

Celergo Global Payroll

Kira Rubiano:

krubiano@celergo.com

(847) 512-2627

Slide3

3

Regional Breakout

Payroll Set-up

Payroll Timing

Payroll Calculations

Funding Requirements

Compliance & Filings

Outsourcing & Management Trends

Agenda

Slide4
Regions for Today's Presentation

Slide5

5

Middle East & Africa (MEA)

Latin America

Asia Pacific

Europe

Regions

Slide6

EntityEmployment ContractsNew Hires and Terminations

Payroll Set-up

Slide7
Entity:

Most countries require entity set-ups for payrollPEOs are not commonMany try to use the contractor route initially

Entity

n

eeded for work permits

Employment Contracts:

Standard/Offer letters

MEA: Payroll Set-up

Slide8
Benefits:

Few additional benefits offeredNew Hires:

May have to be registered with local agencies

Agenda

MEA: Payroll Set-up

Slide9
Terminations:

Standard, except Algeria

MEA: Payroll Set-up

Slide10
Entity

: Most countries require entity set-upsPEO an option for most locationsEmployment Contracts: Complex, include collective agreementsPeru: register every contract with Ministry of Labor

Contract based on industry sectors

Latin America: Payroll Set-up

Slide11
Benefits

: Supplemental benefits are “topped up” – life, medical, pension (tax exempt) Meal and transport tickets are commonNew Hires: Often need to be registered with local governmen

t agencies

Latin America: Payroll Set-up

Slide12
Terminations

: Difficult. Protect the employee – terminations with no cause are costlyUsually a labor lawyer is involved, often requires off-cycle payments

Latin America: Payroll Set-up

Slide13
Entity:

Most countries require entity set-upsPEO an option for some locationsChina: Rep Office need to use PEO

Employment Contracts:

Standard/Agreements

Asia Pacific: Payroll Set-up

Slide14
Benefits:

Some benefits, but mostly government sponsored or individually sourcedNew Hires:

Passport and “booklet” copies are common request

Asia Pacific: Payroll Set-up

Slide15
Terminations:

Standard

Asia Pacific: Payroll Set-up

Slide16
Entity

: Many countries require entity set-upsPEO an option for most locationsDo not need an entity in Netherlands, UK, France, etc.Employment Contracts

:

Complex

Europe: Payroll Set-up

Slide17
Benefits

: Many benefits are included in social taxes, but often companies “top them up.”Meal tickets are commonNew Hires: Often need to be registered with local government agencies

Elements include: collective agreements, payroll timing, and termination clauses

Europe: Payroll Set-up

Slide18
Terminations

: Difficult.Usually a labor lawyer is involved, often requires off-cycle payments

Europe: Payroll Set-up

Slide19

Pay CyclesPayroll CalendarHolidays & Work Week Year-End

Payroll Timing

Slide20
Pay Cycles

: typically monthlyPay Dates

:

25

th

– 27

th

Holidays

:

Islamic and Christian Holidays

MEA: Payroll Timing

Slide21

Work Days:Oman, Saudi Arabia: Saturday to WednesdayUAE, Qatar: Sunday to Thursday

Lebanon, Angola, South Africa: Monday to Friday

Work Week

:

40+ hours (43 to 50)

MEA: Timing

Slide22
Year-end

: Middle East:May have none, (GOSI countries- Jan to Dec), Exceptions – Pakistan: Jul to Jun

Africa typically: Jan to Dec, South Africa: Mar to Feb

MEA: Timing

Slide23
Pay Cycles

: Typically monthly and semi-monthly

Mexico (Dependent on Overtime)

Factories may be weekly

Brazil and Argentina: Semi-monthly, with estimated pay

Pay Dates

:

15

th

, EOM

Holidays

:

Christian, Carnival and Easter–10 to 15 holidays a year

Latin America: Timing

Slide24
Work Days

: Monday through FridayWork Week

:

40+ hours (48 most of them)

Year-end

:

Jan to Dec

Latin America: Timing

Slide25
Pay Cycles

: Typically monthlyAustralia (more variability)Philippines/Russia: semi-monthly

Pay Dates

:

25th;

EOM

Holidays

:

Lunar New Year; Ramadan; May

Day

Asia Pacific: Timing

Slide26
Work

Days: Monday through FridayBangladesh: Sun – ThursPakistan: Mon – Sat

Work Week

:

40

hours

Year-end

:

Hong Kong/India: Apr-Mar, Australia: Jul-Jun, Most Jan-Dec

China: None

Japan, Korea include personal tax filings in year-end

Asia Pacific: Timing

Slide27
Pay

Cycles: Typically monthlyCollective agreements determine cycles per yearBelgium: 13.92, Southern Europe: 12, 13, 14

Pay Dates

:

25

th

, 27

th

/28

th

, EOM

Holidays

: Christian Calendar; Many bank holidays Europe: Timing

Slide28
Vacation

: Taken in blocks in the summer 2 to 3 weeksWork Days: Monday through Friday

Work Week

:

37+ hours

Year-end

:

Most are Jan to Dec; UK is Apr to Mar

Europe: Timing

Slide29

Income TaxSocial TaxOther

Payroll Calculations

Slide30
Income Tax

: No wage tax in the Gulf Cooperation Council (GCC) Most of Africa – PAYE concept – withholding and remittanceSocial Tax:

GOSI in GCC

Africa - Most have social tax – single digit percentages

MEA: Calculations

Slide31

Other: (Benefit programs, expats, taxable events)EOSB – end of service following statutory guidelinesMeal allowance, housing, transport allowance, Company cars

MEA: Calculations

Slide32
Income Tax

:Scaled like US – No state conceptSocial Tax:Include: Pension, education, welfare Appear on the register combined into a schema – similar to FICA

Cost: 10 to 15% - usually has a cap, EE and ER contribution, ER is higher

Latin America: Calculations

Slide33
Other

: (Benefit programs, expats, taxable events)Meal Tickets/AllowanceHolidays: Special Treatment depending on location

Latin America: Calculations

Slide34
Income Tax

:Many countries do not withhold wage taxes, these are paid by the individual (Hong Kong, Singapore)Others have sophisticated schemes like Korea and JapanSocial Tax: Common – pension, health, unemployment

Asia Pacific: Calculations

Slide35
Other

: (Benefit programs, expats, taxable events)Australia has a fringe benefit taxHousing in Hong Kong and IndiaTransportation

Asia Pacific: Calculations

Slide36
Income Tax

: Wage tax – usually payable following monthSocial Tax: High: up to 35%Includes: pension, disability, medical, unemployment, church tax, training, and supplemental taxes depending on income

Europe: Calculations

Slide37
Other

: (Benefit programs, expats, taxable events, accruals, days off)Meal ticketsHolidays: Paid more for holidays and more days than standardPTO based on accruals and collective agreements

Europe: Calculations

Slide38

Bank AccountsFunding PracticesMoney Movement Timing

Funding Requirements

Slide39
Bank Accounts:

Some countries do not require local bank accounts for payroll (UAE, Egypt, Israel)Entities are required to open a bank account

MEA: Payroll Funding

Slide40
Funding Practices

:Some currencies are not traded and need to send USD (Nigeria Naira) Most employees are paid electronicallyUAE, Saudi Arabia and Qatar have WPS requirement Discussion of Middle east currency similar to the EUROTest transactions fully, as they are often complicated and do not have all elements of a normal transfer (some countries do not use addresses)

Have full IBAN and/or SWIFT in case the need to enact BCP is required

MEA: Payroll Funding

Slide41
Timing:

May take several days to send money into Africa, third party bank requiredPayments in country take 2 to 3 days or in some case up to 6 days

MEA: Payroll Funding

Slide42
Bank Accounts:

Many countries do not require local bank accountsEntities are required to open a bank accountBrazil and Argentina need a local account to pay local taxes

Latin America: Funding

Slide43
Funding Practices:

Some currencies are considered exotic “COP, BRL” May have to send USD and reconcileHave full IBAN and/or SWIFT incase the need to enact BCP is requiredMost employees are paid electronically

Latin America: Funding

Slide44
Timing:

Complex funding with third party banks involvedNormal international wire timing is 2 to 3 daysIn country transfers typically take 24 hours

Latin America: Funding

Slide45
Bank Accounts

:Many countries do not require local bank accounts for payroll funding but highly encouragedEntities are required to open a bank accountRussia needs a local account to pay local taxes

Asia Pacific: Funding

Slide46
Funding Practices:

Some currencies are considered exotic “KRW, TWD” Some currencies are pegged or floating fixed to USD – HKD, CNYHave full IBAN and/or SWIFT in case need to enact BCP is requiredMost employees are paid electronically

Asia Pacific: Funding

Slide47
Timing:

May take several days to send money into Asia (5 days for Korea, up to 10 for Taiwan)Internal transfers may several days - Japan

Asia Pacific: Funding

Slide48
Bank Accounts:

Many countries do not require local bank accountsMay have bank accounts in one country service many countriesSome cases need in country bank account for refunds - Switzerland

Europe: Funding

Slide49
Funding Practices:

Relatively stable currencies, with high trade volumesSEPA (Singe Euro Payment Area) fully implemented as of 2014Have full IBAN and/or SWIFT in case the need to enact BCP is required

Europe: Funding

Slide50
Timing:

Move funds within 48 hours from outside SEPA zoneLocal transfer can still take up to 24-48 hoursMost bank to bank relationships, so transfers are relatively simpleSame day transfers are available

Europe: Funding

Slide51

Tax FilingsComplianceRisk

Compliance & Filings

Slide52
Tax Filings:

Middle East: GCC countries have GOSI/SS filings (UAE, Qatar, Oman, Kuwait, Saudi Arabia, Bahrain) - GOSI: Compulsory in Saudi ArabiaOptional by employee in other countries and across the regionAfrica: Filings are often manual and may be required to be submitted in person

MEA: Compliance

Slide53
Compliance:

Middle East: GCC, very minimal – Lebanon, Pakistan, Jordan: ComplexAfrica: Difficult to keep up to date on taxes. Often retroactive and local payroll systems have limited capabilityCompliance: Filings are manual & many countries have poor record keepingTax law is open to interpretation and may vary by industry (oil & gas, financial)

MEA: Compliance

Slide54
Risk

: Work permits are based on compliance, which is poorly maintained locallyFilings can be very difficult; Government is continually changing its requirements Low level of compliance with data standards

MEA: Compliance

Slide55
Tax Filings:

Are often manual and require in person submission and onlineBrazil – Move to E-socialSubmissions for each social program (Income and social)Pay slips need employee signatures (Mexico)

Latin America: Compliance

Slide56
Compliance:

Based on collective agreements and industryComplex and often changing as the political environments are changing

Latin America: Compliance

Slide57
Risk:

Latin America has challenges with changing political environmentsCurrency restrictions, money movement restrictionsTax law changes are often open to interpretationCountries are watching contractors to ensure benefits

Latin America: Compliance

Slide58
Tax Filings:

Many are still manualRequire a company seal, stamp, signatureNeed to be kept for audit purposesMay be simple, mainly year-end and Pension programs (MPF, CPF)

Asia Pacific: Compliance

Slide59
Compliance:

Not significant change in types of taxes, programs (rates change often)Well documented requirementsJapan complicated – need special employees to confirm social calculations

Asia Pacific: Compliance

Slide60
Risk:

As a region, Asia Pacific is low risk on compliance and has high transparencyChina and Russia pose some risk related to data and data privacy

Asia Pacific: Compliance

Slide61
Tax Filings:

From simple to complex (Switzerland, UK simple – Italy, France – complex)Several countries have different timings for different formsGenerally do not have the concept of “state filings”, often split by type (social insurance, tax, etc.)Shift to Automated Filing System (UK RTI, France DSN)

Europe: Compliance

Slide62
Compliance:

Not significant change in types of taxes, programs - Standard forms, process for complianceSome ambiguity on what is required to be taxed or notAlso includes employment contracts, work place, and other ancillary administration related to payroll

Europe: Compliance

Slide63
Risk:

As a region, Europe is low risk on compliance and transparencyGeneral Data Protection Regulation (GDPR) - Data security and privacy is very key - Risk is in employment practices versus payroll

Europe: Compliance

Slide64

Payroll Trends

Slide65
Outsourcing:

Payroll is often outsourced for the Middle EastAfrican payroll is often outsourced by companies with smaller local populations, when the HQ is internationalSouth African companies outsource, but in the rest of the region the outsourcing concept is not as mature

MEA: Payroll Trends

Slide66
Management:

Payroll Best Practice: Manage in RegionNeed Sunday to Thursday or Saturday to Wednesday supportTime zone supportMore oversight is needed for pay calculation auditingMay need tax consulting support

MEA: Payroll Trends

Slide67
Outsourcing:

Payroll is outsourced some of the time, more now than in the pastLatin American payroll is often outsourced by companies with smaller local populations, especially when the HQ is internationalPayroll outsourcing by Latin American not as matureHR Admin components are often outsourced with payroll as part of the package (Medical exams, archiving of payroll and HR documents, registering employment contracts, probation period)

Increased size of expatriate populations – LATAM international trade agreements – fueling expat population growth

Latin America: Payroll Trends

Slide68
Management:

Payroll Best Practice-Manage in RegionNeed local language support More oversight is needed for HRO administrationMay need tax consulting support for tax law change

Latin America: Payroll Trends

Slide69
Outsourcing:

Payroll is often outsourced for Australia, New Zealand, and some countries on a local basisCost is very low to managing payroll in-house, so many companies will only outsource for visibility and compliance, but not for costAsian payroll is often outsourced by companies with smaller local populations, when the HQ is international

Asia Pacific: Payroll Trends

Slide70
Management:

Payroll Best Practice: Manage in Region, Can be GlobalSmall Asian payrolls can be managed remotely, as English is typically good and payroll is transparent Larger Asian payrolls are often managed in region for time zone support or managed in-house

Asia Pacific: Payroll Trends

Slide71
Outsourcing:

Payroll is often outsourced in Europe, it is a maturing market - Both European and global companies outsource Generally companies outsource because of the complexity and prefer to keep their headcount in non-core areas lowThe cost of outsourcing is high (typically not a cost play, but an expertise, technology, or visibility requirement)Also, try to streamline the process across the region

Europe: Payroll Trends

Slide72
Management:

Payroll Best Practice: Manage in Region, Can be GlobalIf populations are small, can manage globallyLanguage can be an issue, Payrolls are more complex from an employment perspective, lending to regional support being preferredVery large populations need in-house local expertise

Europe: Payroll Trends

Slide73

Thank You!