Business challenges – Corporate payroll outsourcing service

Once you’ve made the decision to go down the payroll outsourcing route, you can rest assured that tackling your monthly payroll management task is taken completely out of your hands. This means calculating how much staff are due to be paid (both local and expatriate), including complex statutory payments, commissions, travel expenditure, overtime, Social Security Fund (SSF) contributions as well as sickness payments, and more is done for you.

Furthermore, all relevant documents are professionally prepared and sent to applicable government departments thus avoiding you any legal headaches.

While the corporate benefits of outsourcing payroll are well-defined, there are several areas of payroll that are not so clear and should be food for thought for business owners and executives. Take for example, Social Security Fund compliance, a seemingly straightforward task but one that is frequently misunderstood. To begin with, it is incorrect to think that only an employee’s salary is subject to SSF contributions. You see, the definition of "wage" in the Social Security Act is very broad.

Noncompliance or under declaration of SSF contributions can create a significant surcharge because there is no limit on the period on which it can be charged. In addition, when you hire new staff or say goodbye to those leaving your company or if you change company address, there is a due date prescribed in the Social Security Act. Failing to submit the correct paperwork on time could result in imprisonment not exceeding 6 months or a fine not exceeding 20,000 baht or both. By selecting an internationally recognized payroll outsourcing service, these delicate issues are eliminated and you are free to concentrate on driving your business goals.

For foreign companies operating in Thailand or Thai companies employing expatriates, it is incumbent upon the employer to fully understand whether income tax is being paid abroad and in Thailand. For the Thai employer, consideration must be given to tax implications relating to work performed in Thailand. Are you sure that you are reporting correctly and your employee is compliant in all jurisdictions? For complex cases, knowledge of the relevant Double Taxation Agreement is essential. However, implementing a payroll outsourcing service will not relieve you of these legal obligations, but you will have a guiding hand to ensure compliance.

Mazars have a global mobility service that specializes in managing skilled employees that are required to move between and work in other countries. For example, is the stock-based compensation granted before moving to Thailand taxable when exercised here? What tax should be declared in Thailand for an employee working remotely overseas? These questions are increasingly important as more energy is given to attracting skilled foreign workers in key areas such as information technology, international development, teaching, science and other targeted industries under Thailand’s Board of Investment (BoI) Smart Visa scheme.

In addition to the common compliance requirements relating to tax, Social Security Fund, Provident Fund / Welfare Fund, Student Loan Fund and Legal Execution, employers also need to consider the Labour Protection Act, Labour Relation Act, Empowerment of Persons with Disability Act and the Skill Development Promotion Act to ensure compliance with tasks such as reporting, overtime, termination and work regulations. While most of these functions are typically background tasks, there may come a time when, as a company owner or as a director, you will have to deal with one or more of these issues. Initiating an outsourcing payroll plan gives you the confidence that all tax obligations, employee funds, labour laws and overall compliance are covered.

As a company that provides a global payroll outsourcing service, Mazars can give you the answers to questions you may have such as what is maximum number of overtime hours in a week?; What are the overtime rates on a weekday, weekend or holiday?; How many leave types are compulsory in Thailand?; What is the correct practice to terminate an employment contract?; How does an employer’s legal responsibility change once it has more than 10 or 100 employees?; or, if you would like to change your company's regulation or employment condition, how do you go about doing it?

There may be other areas of concern you harbour over outsourcing payroll for your company. If you would like to explore the benefits of Mazars Thailand’s global payroll platform, please contact us today.

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