Embed Size (px)
Citation preview
Payroll Processing Across Asia
Issue 7 • January and February 2014
From Dezan Shira & Associates
Key Considerations When Choosing a Payroll Outsourcing Model
Calculating Individual Income Tax & Social Insurance
The Accelerating Trend Towards Outcourcing Payroll Processing in Asia
p.4 p.5 p.11www.asiabriefing.com
2 - ASIA BRIEFING | January and February 2014
Dear Clients, and Readers,
Collecting tax revenue and administering social insurance are two of the most
fundamental roles of government. When establishing or operating a business in
Asia, companies must take special care to comply with regulations concerning
taxes deducted at the source of employee payroll (withholding tax) and
mandatory contributions to social insurance programs.
As you might expect in a region comprising so much diversity and complexity,
the systems utilized by governments in places like China and Vietnam (countries
with large populations and with a communist background) are substantially
different than those in places like Hong Kong and Singapore - small jurisdictions with a distinctly capitalist
outlook. India, a populous emerging nation with a democratic system of government, provides an
interesting contrast in terms of how it taxes and supports its citizens.
In Asia Briefing Magazine’s first issue of 2014, we provide a country-by-country introduction to how
payroll and social insurance systems work in these five above-mentioned countries or administrative
regions. While tax authorities are expected to publish guidelines for employers to use in calculating
both withholding tax and contributions to social insurance programs, comprehensive guidelines can
sometimes be difficult to obtain and confusing to understand.
We also compare three distinct models companies use to manage their payroll across various countries
with external vendors, and explain the differences between three main models: country-by-country,
managed, and integrated models while highlighting some benefits and drawbacks of each.
Finally, as we venture together into 2014, I hope this and future issues of Asia Briefing Magazine will
help readers successfully navigate Asia’s complex payroll environment and serve as a useful resource for
companies looking to stay in compliance with local regulations.
With best wishes,
ASIA BRIEFINGIssue 7 • January and February 2014
Additional resources available on www.asiabriefing.com
Introduction
Gulammohammed Sheikh
Gouache, acrylic, pastel, charcoal and crayon on paper, 146.6 X 238.0 cms
Delhi Art Gallery
[email protected] | www.delhiartgallery.com | +91 11 4600 5300
Chris Devonshire-EllisPrincipal, Dezan Shira & AssociatesPublisher, Asia Briefing
For Reference
Asia Briefing and related titles are produced by Asia Briefing Ltd, a wholly owned subsidiary of Dezan Shira Group.
Materials within is provided by Dezan Shira & Associates. No liability can be accepted for any of its contents. For any queries regarding the content of this magazine, please contact:
This Month’s Cover Art
January and February 2014 | ASIA BRIEFING - 3
Payroll Processing Across AsiaContents
Human Resources & Payroll in China
Human Resources and Payroll in China (Third Edition)
The Asia Briefing 2013 Asia Tax Guide
Asia-Pacific Moves Closer to Regional Economic Community
Related Material From Asia Briefing
New Issue Out Now
“Annual Audit and Compliance in China”Click Here
Key Considerations When Choosing a Payroll Outsourcing Model
Navigating Individual Income Tax
Social Insurance Compliance
The Accelerating Trend Towards Outcourcing Payroll Processing in Asia
p.4 p.5p.9 p.11
This publication is available as interactive
PDF and ePublication with additional
clickable resource icons below:
INDIA BRIEFING
VIETNAM BRIEFING
To Subscribe to Asia Briefing
Magazine (6 issues per year),
please Click Here
Annual Subscription
All materials and contents © 2014 Asia Briefing Ltd. No reproduction, copying or translation of materials without prior permission of the publisher.
ASEAN Regulatory News
Our Magazines & Guides
Podcast & Webinar
Questions & Advisory
Visit Our Professional Services
Asia Regulatory Legal & Tax News
Regulatory Framework
Resources on Emerging Asia
4 - ASIA BRIEFING | January and February 2014
Key Considerations When Choosing a Payroll Outsourcing Model
– By Adam Livermore and Junyi Zhang, Dezan Shira & Associates
When determining which type of model is most appropriate for managing payroll across multiple countries, employers should take into
account the advantages and shortcomings of the three most commonly utilized models.
The first, a country-by-country model, entails contracting vendors locally in each country. The second, a managed model, entails contracting
a single vendor (integrated service provider) who subsequently sub-contracts the actual processing on a country-by-country basis. Finally,
integrated models entail contracting one vendor able to provide payroll services via vendor employees in each country of operation,
reporting through a single-point-of-contact methodology rather than sub-contracting payroll duties to other firms.
Comparing Multi-Country Payroll ModelsCountry by Country Model Managed Model Integrated Model
Efficiency Many communications required with multiple parties and inconsistent reports
Fewer communications, but still difficult to obtain consistent reports
Communication is efficient and reports are consistent
Accuracy Very difficult to verify Easier to verify, but a higher likelihood of verification delay
Easy to verify with all data and calculations in one database
Transparency Communication at the local level, leading to a reliance on local staff for transparency
Lack of standard reporting reduces level of transparency
Communication is at global level and all the reports are in standard format, allowing high levels of transparency
Confidentiality Higher risk with multiple vendors and active involvement of local staff
Lower risk with vendors usually providing secure information transfer platforms
Significantly lower risk with all data stored on one secure system
Country by Country Model Managed Model Shared Service or Integrated Model
HQ Management TeamHR & Finance
Local Company In Country
A
Local Company In Country
B
Local Company In Country
C
Service Provider In
CountryA
Service Provider In
Country B
Service Provider In
CountryC
HQ Management TeamHR & Finance
Local Company In Country
A
Local Company In Country
B
Local Company In Country
C
Service Provider In
CountryA
Service Provider In
Country B
Service Provider In
CountryC
HQ Management TeamHR & Finance
Local Company In Country
A
Local Company In Country
B
Local Company In Country
C
Integrated Service
Provider
Integrated Service Provider
Shared Service Provider In Multiple Countries
January and February 2014 | ASIA BRIEFING - 5
Navigating Individual Income Tax
– By Adam Livermore, Junyi Zhang, and Shawn Greene, Dezan Shira & Associates
Individual Income Tax at a Glance Individual income tax (IIT) rates and regulations vary considerably across Asia. In this article, we explore IIT in China, Hong Kong, India,
Singapore and Vietnam in depth. Below, we begin by providing a comparative overview of IIT in these five countries. The chart, “Individual
Income Tax Rates Across Asia” displays IIT rates estimated to the nearest thousand US dollars. The graph above it provide a visual representation
of these differences, It is important to remember that these graphs are based upon estimates and the exchange rate at the time of writing,
and should not be used to make any meaningful IIT calculations.
Tax
Rate
0%
10%
20%
30%
40%
0 2,500 5,000 7,500 10,000 12,500 15,000 17,500
Individual Income Tax Rate
Estimated Yearly Taxable Income (USD)
Hong Kong
India
Singapore
Vietnam
China
30,000 60,000 90,000 120,000
Individual Income Tax Rates Across Asia
Estimated Yearly Taxable Income (TI) in USD (for comparison only)
China Hong Kong India Singapore Vietnam
3,000 or less 3% 2% 0% 0% 5%
3,001-6,000 10% 2-7% 10% 0% 10%
6,001-8,000 10% 7% 10% 0% 15%
8,001-10,000 10-20% 7% 20% 0% 15%
10,001-15,000 20% 12% 20% 0% 20%
15,001-18,000 20% 17% 20 - 30% 0 - 2% 20%
18,001-20,000 25% 17% 30% 2% 25%
20,001-30,000 25% 17% 30% 2 - 3.5% 25%
30,001-45,000 25% 17% 30% 3.5 - 7% 30%
45,001-60,000 25% 17% 30% 7% 35%
60,001-100,000 30-35% 17% 30% 7 - 15% 35%
100,001-150,000 30-35% 17% 30% 15 - 17% 35%
150,001 or more 35-45% 17% 30% 17 - 20% 35%
6 - ASIA BRIEFING | January and February 2014
Navigating Individual Income Tax
China in-DepthMonthly Income Tax WithholdingEmployers are required to withhold and pay Individual Income Tax (IIT) on behalf of employees on a monthly basis. Following the payment
of salaries, companies should complete online IIT filings within the first two weeks of every month. The precise deadline for filing IIT often
differs depending upon the city in which the company is located. According to national filing laws, however, this process should always
be completed within the first fifteen working days of the month regardless of location.
After the IIT filing is submitted, the local tax bureau will directly deduct the amount of IIT filed from the company’s bank account. In order
to facilitate this process, the company must have already signed an agreement with both the local tax bureau and their bank allowing the
amount filed to automatically be debited. Many large domestic Chinese banks are currently able to facilitate this transaction, but several
foreign banks including Citibank, HSBC, and Standard
Chartered are still unable to facilitate this transaction in
most cities. Businesses must keep in mind, however, that
the IIT compliance process often differs significantly from
city to city.
Annual Declaration of Employee IncomeIndividuals who have income from specified sources in
China that exceeds RMB120,000 in the previous financial
year (January 1 to December 31) must submit an annual
income declaration no later than March of the following
year. For employers, it is only necessary to provide
employees with details concerning how much money
was earned in the previous financial year via the company
so that they can accurately declare their income. Some
companies, particularly those with large amounts of foreign employees, may choose to assist employees with making this declaration.
Hong Kong In-DepthFiling Personal Tax Returns Unlike mainland China, Hong Kong’s comparatively small population and predominantly white collar labor force makes it feasible for the
local government to require individual taxpayers (rather than companies) to file an annual tax return with the Inland Revenue Department
(IRD). The year of assessment runs from April 1 through March 31 of the following year. The IRD sends individual tax returns by May 1, and
tax returns are typically required to be submitted within
one month after the date of issue.
Even if an individual does not have any income to report,
he or she will need to declare zero income on a tax form.
A married couple can elect to receive a joint assessment
if the single assessment based on their combined income
results in a lower tax liability.
Returns may be filed online or by post mail. After the filing
of the return, a ‘Notice of Assessment’ or tax bill will be sent
from the Inland Revenue Department that indicates the
amount of tax to be paid for the given year of assessment
and the provisional salaries tax payable for the succeeding
year of assessment. If there is any disagreement, the
individual can inform the tax department within 30
days of receipt and state the reason for the objection.
Notwithstanding any notice of objection lodged, tax must
be paid on or before the due date specified in the notice
of assessment.
Individual Income Tax Rates in ChinaYearly Taxable Income (Local Currency - RMB)
Yearly Taxable Income (In USD, cross reference only)
1 USD = 6.0916 RMB
Tax Rate
18,000 or less 2,955 or less 3%
18,001 - 54,000 2.955 - 8,865 10%
54,001 - 108,000 8,865 - 17,729 20%
108,001 - 420,000 17,729 - 68,947 25%
420,001 - 660,000 68,947 - 108,346 30%
660,001 - 960,000 108,346 - 157,594 35%
960,001 or more 157,594 or more 45%
Individual Income Tax Rates in Hong KongYearly Taxable Income(Local Currency - HKD)
Yearly Taxable Income (In USD, cross reference only)
1 USD = 7.7533 HKD
Tax Rate
Progressive tax rate system
40,001 or less 5,160 or less 2%
40,001 - 80,000 5,160 - 10,319 7%
80,001 - 120,000 10,319 - 15,477 12%
120,001 or more 15,477 or more 17%
Flat tax rate system
Net income 15%
Note: In HK, individuals are taxed at progressive rates on their net chargeable income (i.e. assessable income after deductions and allowances) starting at 2% and ending at 17%; or at a standard rate of 15% on net income (i.e. income after deductions), whichever is lower. 75% of the final tax payable under salaries tax and tax under personal assessment would be waived, subject to a ceiling of $10,000 per case.
January and February 2014 | ASIA BRIEFING - 7
Navigating Individual Income Tax
India In-DepthWithholding Tax Returns FilingSimilar to China, businesses in India are required to withhold Individual Income Tax (IIT) from an employee’s salary on a monthly basis. During
the first seven days of each month, employers must deposit the deducted tax from the previous month with the central government. The
only exception to this rule involves the month of March, during which tax deducted may be deposited on or before April 30th.
Employers are required to withhold tax on various payments including rent, interest, dividend, royalty, and service income. In this sense, the
compliance requirements for employers are more complex in India than in any of the other countries explored. Businesses should actively
coordinate with employees to understand the details of supplementary income they are receiving and make the relevant calculations and
submission of tax before deducting them from the salary.
Quarterly withholding tax return statements must also be
submitted by the 15th of the month following the end
of a quarter to the central government reporting the tax
deducted at source during the quarter. Failure to meet
either this deadline or the monthly IIT deposit deadline
can result in both interest and penalties being imposed
on a company.
Annual Declaration of Employee IncomeIn addition to withholding IIT monthly, businesses must
issue an annual certificate within two months from the
end of the tax year to employees regarding the amount of tax deducted at the source of income. All employees must be registered with
tax authorities via a Permanent Account Number (PAN), which must be quoted on all relevant correspondence with tax authorities.
As explained above, an employee should declare income from other sources to their employer in order to facilitate the calculation of tax
deduction at source (TDS). An employer can consider income declared by an employee only if the TDS calculated on salary plus other
income declared is more than the TDS on salary only.
Singapore In-DepthFiling Personal Tax ReturnEvery taxpayer in Singapore must file an annual tax return
with the Inland Revenue Authority of Singapore (IRAS). The
basis period for the year of assessment runs from April 1
through March 31 of the following year. Within 30 days of
receiving a Notice of Assessment (NOA), individuals should
pay the amount indicated or, if an individual does not have
any income to report, declare zero income on the tax form.
Companies are required to submit forms detailing
employee income information by March 1st each year.
In order to streamline and facilitate the tax collection
process, IRAS encourages employers to participate in the
Auto-Inclusion Scheme (AIS) for Employment Income.
Under this scheme, employers submit employee income
information electronically to IRAS each year. After doing
so, income information will be shown on the employees’
electronic tax returns and automatically included in their
income tax assessments. If an employer participates in the AIS for Employment Income it is not necessary to issue hard copies of IR8A/IR8S
forms to employees, although some companies may still wish to provide employees with a separate earnings statement for their records.
Individual Income Tax Rates in IndiaYearly Taxable Income (Local Currency - INR)
Yearly Taxable Income (In USD, cross reference only)
1 USD = 62.55 INR
Tax Rate
200,000 or less 3,197 or less 0%
200,001 - 500,000 3,197 - 7,994 10%
500,001 - 1,000,000 7,994 - 15,987 20%
1,000,001 or more 15,987 or more 30%
Individual Income Tax Rates in SingaporeYearly Taxable Income (Local Currency - SGD)
Yearly Taxable Income (In USD, cross reference only)
1 USD = 1.26 SGD
Tax Rate
20,000 or less 15,926 or less 0%
20,001 - 30,000 15,926 - 23,889 2%
30,001 - 40,000 23,889 - 31,852 3.5%
40,001 - 80,000 31,852 - 63,704 7%
80,001 - 120,000 63,704 - 95,557 11.5%
120,001 - 160,000 95,557 - 127,408 15%
160,001 - 200,000 127,408 - 159,261 17%
200,001 - 320,000 159,261 - 254,817 18%
320,001 or more 254,817 or more 20%
8 - ASIA BRIEFING | January and February 2014
Navigating Individual Income Tax
Vietnam In-DepthPersonal Income Tax Withholding In Vietnam, Personal Income Tax (PIT) declaration and payment is carried out on a withholding basis. Vietnam’s tax regulations encompass
the concept of tax deduction at source, and legalize this by specifying that certain employers are designated entities for tax collection
purposes. Such entities are required to withhold PIT from employees’ salaries.
Employers are required to collect taxes on employee income for both foreign and local Vietnamese employees, and ensure the timely
submission of employees’ tax declarations. Employers must withhold the required percentage of their employees’ personal income, and
deposit the monthly amount with the State Treasury no later than the 20th day of the following month. Employers must also finalize PIT
declarations on behalf of their employees at the end of
the year provided the employee only has income from
the employer, and authorizes their employer to make this
tax finalization on their behalf. An annual tax finalization
on employees’ taxable income must be submitted by
companies to the relevant tax authorities no later than
90 days from the last day of the tax year.
Each employee is required to obtain a unique individual
tax number (tax code) and declare dependents that
qualify for tax relief. Additionally, employees must
complete their own tax finalization returns where their
tax liability at year-end is greater (or less) than the sum
of tax paid during the year. Employees may authorize
the company to complete this process on their behalf.
Special OfferComplimentary 2014 Annual Magazine Subscriptions
A: If the answer is yes, Asia Briefing would like to offer you complimentary subscriptions to our collection of magazine publications. Through our parent company, Dezan Shira & Associates, a specialist foreign direct investment practice, we offer this collection of premium business intelligence with the goal of helping the members of your organization conduct business in Asia.
Are you a business/trade organization, chamber of commerce, consulate, embassy, non-profit organization, or non-governmental organization?
www.asiabriefing.com
Q:
A:
To take advantage of this SPECIAL OFFER please email:[email protected] with the subject line “2014 Annual Subscription Offer”
Individual Income Tax Rates in Vietnam
Yearly Taxable Income (Local Currency - VND)
Yearly Taxable Income (In USD, cross reference only)
1 USD = 21,080 VND
Tax Rate
60,000,000 or less 2,846 or less 5%
60,000,001 - 120,000,000 2,846 - 5,693 10%
120,000,001 - 216,000,000 5,693 - 10,247 15%
216,000,001 - 384,000,000 10,247 - 18,216 20%
384,000,001 - 624,000,000 18,216 - 29,602 25%
624,000,001 - 960,000,000 29,602 - 45,541 30%
960,000,001 or more 45,541 or more 35%
January and February 2014 | ASIA BRIEFING - 9
Social Insurance Compliance– By Adam Livermore, Junyi Zhang, and Shawn Greene, Dezan Shira & Associates
Another headache for employers with operations in multiple countries is the administration of social insurance for their employees. In this
article, we explore in-depth social insurance compliance across the five countries introduced earlier.
China Social Insurance and Housing FundChina’s social security system is especially complex because it is organized at the regional level. While the formal social security system
only covers urban workers, some rural workers who move to the cities to work (the so-called “floating population”) are also covered. On
account of China’s sheer size and legal diversity, the country’s social insurance system is among the most difficult in the world to navigate.
The social security system in China consists of five different types of insurance, plus one mandatory housing fund, introduced in the chart
below. How companies
register and deregister
their employees often
v a r i e s d e p e n d i n g
upon the city and the
employee’s location or
residency. In many large cities (with some notable exceptions such as Beijing), the registration and deregistration of most employees
can be completed online. Similar to withholding tax, companies can make monthly contributions to the fund via direct debit. Many city
governments, however, also restrict which banks are able to facilitate the transaction. At the present time, local Chinese banks can facilitate
these transactions and businesses should verify which banks are approved by the local government to do so in their area of operation.
Mandatory Benefit Types
MaternityMaternity leave is usually three months and paternity leave is generally less than 15 days. In the cities in which maternity insurance is applicable, during a period of maternity or paternity leave, salary is not required to be paid, rather the employee receives a fixed sum from this insurance fund.
PensionOn the precondition that contributions have been made for at least 15 years, upon reaching retirement, an individual can receive a pension based on the amount accumulated in his/her individual fund.
MedicalIn the event of illness/injury, an employee can have part of the treatment cost covered by medical insurance. Contributions accrue to a card that can be used for pharmacy or out-patient costs in government-approved hospitals and clinics (excludes international clinics).
Work-related InjuryThe work-related injury fund covers the cost of treatment should an occupational injury occur. The employer must pay some salary during the period of rehabilitation and, if the employee cannot return to work, compensation must be paid.
UnemploymentIn the event of redundancy (not in the event an employee chooses to resign), on the precondition that an employee has contributed to unemployment insurance for at least one continuous year, the employee may claim unemployment benefits for a maximum of 24 months.
Housing FundDesigned to ensure that workers save to purchase housing, money from this fund can be used to pay the initial down-payment on a house. In most cases, a company determines the contribution rate (within the legal range) when opening its housing fund account.
China Social Insurance and Housing FundParticulars Pension Medical Unemployment Maternity Injury Housing Fund
Company contributions 12%-22% 5%-12% 0.2-2% 0.5%-1% 0.5-2% 5%-20%
Individual contributions 8% 0.5%-2% 0-1% N/A N/A 5%-20%
10 - ASIA BRIEFING | January and February 2014
Social Insurance Compliance
Hong Kong’s Central Provident FundWhile companies are not required to withhold tax from employee income, employers must ensure they contribute to the Mandatory
Provident Fund (MPF, Chinese: 强制性公积金or 强积金), a compulsory saving scheme (pension fund) for the retirement of residents in
Hong Kong. Most employees and their employers are required to contribute monthly to MPF funding schemes according to both salary
and period of employment. Both full and part-time employees in addition to self-employed persons (except those exempt under the
Mandatory Provident Funding Schemes Ordinance or MPFSO) are required to participate in the MPF schemes. The maximum monthly
contribution that can be required for MPF schemes totals HK$1,250 at the maximum relevant income level of HK$25,000. After an employee
has determined which MPF scheme he or she wants to participate in, companies can easily schedule monthly contributions directly to
the agent managing the scheme.
India’s Provident Fund SchemeWhile much of the Indian population does not participate in the country’s social insurance program known as the Provident Fund Scheme,
Indian citizens in the organized sector are entitled to coverage.
International workers including expatriates working for an employer in India are also eligible to participate in the Provident Fund Scheme.
Employers are required to contribute 12 percent of their employees’ specified salary to the scheme, and contributions must be deposited
on a monthly basis by the 15th of the subsequent month.
Social Insurance in India
ParticularsContribution
towards Employee Pension
Contribution towards Employee
Provident Fund
Medical(Employee State Insurance Corporation)
Company contributions 8.33 % 3.67% 4.75%
Individual contributions 10%-12% N/A 1.75%
Coverage 20+ employees 20+ employees 10+ employees
Employee Eligibility All All Employees earning up to INR 15,000 a month
Singapore’s Central Provident FundThe Central Provident Fund (CPF), a compulsory comprehensive savings plan, is designed to fund the retirement, healthcare, and housing
of permanent residents and working Singaporeans. Administered by the Central Provident Fund Board, a statutory board under the Ministry
of Manpower, employers are typically required to contribute 16% of an employee’s monthly salary to the fund while employees must
typically contribute 20%. Employers and employees must contribute monthly to CPF schemes managed by approved private organizations,
according to both their salary and age.
Vietnam’s State Social Insurance FundSocial insurance in Vietnam covers compensation for salary lost due to illness, maternity, working accidents, occupational disease, retirement
and death. There are three types of mandatory social security in Vietnam: social insurance, medical insurance, and unemployment insurance.
Mandatory employer contribution to the State Social Insurance Fund is typically 18 percent of gross employee income, and mandatory
employee contribution is typically 8 of percent gross income (applied from January, 2014). For employees working under an employment
contract that is less than three months in duration, the social insurance contribution amount should be included in their salary, and
employees are responsible for paying their own social insurance.
Social Insurance in VietnamPension and
Death InsuranceSick and Maternity
InsuranceOccupational Accident and
Diseases Insurance
Medical Insurance
Unemployment Insurance
Company Contributions 14% 3% 1% 3% 1%
Individual contributions 8% N/A N/A 1.5% 1%
Coverage All All All All 10+ Employees
January and February 2014 | ASIA BRIEFING - 11
Social Insurance Compliance
The Accelerating Trend towards Outsourcing Payroll Processing Work in Asia
For several years now, multinational companies with operations in one or more Asian countries have
begun transitioning to an outsourced model for handling their payroll and HR administration. Already
well-entrenched in the U.S. and U.K., the accelerating trend towards outsourcing payroll processing is
unlikely to reverse due to the huge efficiency and savings it brings. In Asia, however, the cost-benefit
of outsourcing is significantly less clear-cut. In essence, the transition towards outsourcing in Asia is
primarily being driven by three factors:
1. The increased importance of Asia-based employees to their organization, and the importance of
ensuring the handling of their payroll in a professional manner.
2. The increasing number of Asia-based employees, and increased complexity of their compensation
packages.
3. The increasing virtualization of HR administration, which has allowed work that previously entailed
locally-based employees working with government bureaus to be handled from an online location.
Savings are now kicking in due to the virtualization mentioned above in countries like China and
Vietnam, but the main motivation for companies to choose an outsourced model is more related
to the ability to achieve a higher level of consistency in data management, greater transparency for
management, and improved confidentiality across their Asia-based entities. As companies continue
to expand their operations across Asia, not only does their headcount grow, but the number of legal
entities they must maintain also increases. Such expansion poses a great challenge to these companies
when seeking vendors able to comprehend and efficiently explain local payroll requirements, and
produce reports that seamlessly link in with the accounting platforms they are using.
“One-country” vendors can often do an efficient job, but communicating with several such companies
every month can be very time-consuming for HR managers based at HQ. On the other hand, “global”
vendors (a managed model) can sometimes struggle to meet all the local statutory requirements and
customs in faraway markets that change rules and regulations frequently.
Stepping in to fill this gap are the “pan-Asia” vendors, offering shared service or integrated payroll
outsourcing models. Their ability to coordinate multiple payrolls across the entire region represents a
significant improvement over the traditional “one-country” and “global vendor” model. The proliferation
of pan-Asia vendors is partially why the transition to the outsourcing model is accelerating.
Adam LivermorePartner,
International Payroll Operations Director
Dezan Shira & Associates
Social Insurance at a GlanceChina Social Insurance and Housing Fund
Company Contributions 23.2-59%Individual Contributions 13.4-31%
Hong Kong Mandatory Provident Fund (MPF)Company Contributions 5%Individual Contributions 5%
India Provident Fund SchemeCoverage 20+ Employees Depending
Upon Employee Income Less than 20 Employees Depending Upon Employee Income
Company Contributions 12-16.5% 0-4.75%Individual Contributions 10-12% 0-1.75%
Singapore Central Provident Fund (CPF)Company Contributions 6.5-16% Depending Upon AgeIndividual Contributions 5-20% Depending Upon Age
Vietnam State Social Insurance FundCoverage 10+ employees Less than 10 employees Company Contributions 22% 21%Individual Contributions 10.5% 9.5%
Op-Ed
Corporate Establishment | Due Diligence | Business Advisory Tax Planning | Accounting | Payroll | Audit and Compliance
Your Partner for Growth in Asia22 years of excellence 1992-2014
IndiaDelhi: [email protected]: [email protected]
Italy Liaison O�ce: [email protected]
VietnamHo Chi Minh City: [email protected]: [email protected]
Hongkong [email protected]
United StatesLiaison O�ce: [email protected]
www.dezshira.com
@DezanShira Dezan Shira & Associates Dezan Shira & Associates
