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
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Slide1
Global Payroll: Regional FocusPresented by: Kira RubianoDate: October 2017
Slide22Speaker
Kira Rubiano
Senior Partner Management Specialist
Celergo Global Payroll
Kira Rubiano:
krubiano@celergo.com
(847) 512-2627
Slide33
Regional Breakout
Payroll Set-up
Payroll Timing
Payroll Calculations
Funding Requirements
Compliance & Filings
Outsourcing & Management Trends
Agenda
Slide4Regions for Today's PresentationSlide55
Middle East & Africa (MEA)
Latin America
Asia Pacific
Europe
Regions
Slide6EntityEmployment ContractsNew Hires and Terminations
Payroll Set-up
Slide7Entity: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
Slide8Benefits:Few additional benefits offeredNew Hires:
May have to be registered with local agencies
Agenda
MEA: Payroll Set-up
Slide9Terminations:Standard, except Algeria
MEA: Payroll Set-up
Slide10Entity: 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
Slide11Benefits: 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
Slide12Terminations: 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
Slide13Entity: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
Slide14Benefits:Some benefits, but mostly government sponsored or individually sourcedNew Hires:
Passport and “booklet” copies are common request
Asia Pacific: Payroll Set-up
Slide15Terminations:Standard
Asia Pacific: Payroll Set-up
Slide16Entity: 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
Slide17Benefits: 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
Slide18Terminations: Difficult.Usually a labor lawyer is involved, often requires off-cycle payments
Europe: Payroll Set-up
Slide19Pay CyclesPayroll CalendarHolidays & Work Week Year-End
Payroll Timing
Slide20Pay Cycles: typically monthlyPay Dates
:
25
th
– 27
th
Holidays
:
Islamic and Christian Holidays
MEA: Payroll Timing
Slide21Work 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
Slide22Year-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
Slide23Pay 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
Slide24Work Days: Monday through FridayWork Week
:
40+ hours (48 most of them)
Year-end
:
Jan to Dec
Latin America: Timing
Slide25Pay Cycles: Typically monthlyAustralia (more variability)Philippines/Russia: semi-monthly
Pay Dates
:
25th;
EOM
Holidays
:
Lunar New Year; Ramadan; May
Day
Asia Pacific: Timing
Slide26WorkDays: 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
Slide27PayCycles: 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
Slide28Vacation: 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
Slide29Income TaxSocial TaxOther
Payroll Calculations
Slide30Income 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
Slide31Other: (Benefit programs, expats, taxable events)EOSB – end of service following statutory guidelinesMeal allowance, housing, transport allowance, Company cars
MEA: Calculations
Slide32Income 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
Slide33Other: (Benefit programs, expats, taxable events)Meal Tickets/AllowanceHolidays: Special Treatment depending on location
Latin America: Calculations
Slide34Income 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
Slide35Other: (Benefit programs, expats, taxable events)Australia has a fringe benefit taxHousing in Hong Kong and IndiaTransportation
Asia Pacific: Calculations
Slide36Income 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
Slide37Other: (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
Slide38Bank AccountsFunding PracticesMoney Movement Timing
Funding Requirements
Slide39Bank 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
Slide40Funding 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
Slide41Timing: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
Slide42Bank 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
Slide43Funding 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
Slide44Timing:Complex funding with third party banks involvedNormal international wire timing is 2 to 3 daysIn country transfers typically take 24 hours
Latin America: Funding
Slide45Bank 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
Slide46Funding 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
Slide47Timing: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
Slide48Bank 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
Slide49Funding 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
Slide50Timing: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
Slide51Tax FilingsComplianceRisk
Compliance & Filings
Slide52Tax 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
Slide53Compliance: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
Slide54Risk: 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
Slide55Tax 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
Slide56Compliance:Based on collective agreements and industryComplex and often changing as the political environments are changing
Latin America: Compliance
Slide57Risk: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
Slide58Tax 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
Slide59Compliance: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
Slide60Risk: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
Slide61Tax 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
Slide62Compliance: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
Slide63Risk: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
Slide64Payroll Trends
Slide65Outsourcing: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
Slide66Management: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
Slide67Outsourcing: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
Slide68Management: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
Slide69Outsourcing: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
Slide70Management: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
Slide71Outsourcing: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
Slide72Management: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
Slide73Thank You!