All You Need to Know About Payroll in South East Asia
South East Asia features some of the fastest growing economies in the world. The presence of varying landscapes and cultures make it one of the most diverse markets for business expansion.
However, this diversity can surely make it tricky to decide which country to expand to, especially when you start to take payroll compliance into account. Most Southeast Asian countries such as Indonesia, Singapore, Vietnam, the Philippines, Thailand, and Malaysia, boast a high economic growth rate. Here is an overview of the basics of payroll compliance in the top 5 countries in the region:
Businesses located in Indonesia must adhere to certain rules when processing payroll. In general, payroll compliance for foreign companies in Indonesia includes individual income tax for employees, capital gains tax, social security costs, sales tax, payroll tax, withholding tax, and business tax.
The payroll reporting date is typically the 10th of the following month, and records of the reports must be maintained for a minimum of 5 years. In order to pay workers and tax authorities, it is mandatory to use an in-country bank account.
There are different payroll compliance laws in Thailand depending on whether your business recruits residents or non-residents. Major aspects to keep in mind as a business owner include taxable income, value-added tax, social security contribution, property tax, specific business tax, and corporate income tax.
Income tax rates in Thailand start from 0% for the lowest-earning worker and up to 35% for employees earning a large amount. Employees in Thailand must be given pay slips for every pay period, and payroll records must be maintained for a minimum of 7 years.
Businesses located in the Philippines must ensure that they adhere to the various payroll laws set by the Department of Labor and Employment (DOLE) and the Bureau of Inland Revenue (BIR).
It is mandatory for all employers in the Philippines to deduct a withholding tax from their staff members’ salaries every month according to law. Moreover, each citizen and foreign national earning in the country must pay income tax, which is set on a progressive scale.
The government of the Philippines has substantially facilitated tax payment for businesses by introducing an electronic filing and payment procedure for social security contributions.
In Vietnam, it is compulsory for companies to comply with tax regulations such as individual income tax, value-added tax, social security costs, business tax, withholding tax, and permanent establishment concerns.
It is vital for businesses operating in Vietnam to know about the minimum wage rates when determining employee salaries. Moreover, it is mandatory for employers to collect income taxes from both local and foreign employees, make sure the employee tax declarations are submitted no later than the 20th of the following month.
Singapore does not mandate monthly withholding obligations, but businesses are nevertheless required to make social security contributions.
According to the laws of the country, it is compulsory to provide each employee with a timely pay slip. This must include employment details such as basic salary amount, date of payment, deductions, and the net monthly salary.
All employers are required to maintain an employment and salary record for their employees for at least 2 years. Moreover, companies can only allow employees up to 72 hours of overtime work in a month.
Southeast Asia is not just a popular tourist destination but is also a lucrative option for business expansion. Most of the countries fall under the economic umbrella of the Association of South East Asian Nations (ASEAN), which is recognized as the third-largest trade bloc in the world.
Expansion to Southeast Asia allows you to take advantage of the services of a skilled workforce and also have access a large customer base. Payroll compliance laws in the region are generally simple, but need to be adequately studied before you begin.For further insight about expanding to different markets around the globe, click here to explore our website.