Category Archives: Taxes

Payroll in APAC: The Philippines

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The Payroll in APAC blog posts are (as you might have guessed), a series of blog posts on tax and employer contribution laws in APAC nations. This gives payroll and human resource administrators a high level understanding on what you should know in these countries. Our first post is on the Philippines.

Creditable and Final Withholding Taxes:

The Bureau of Internal Revenue (BIR) is the Philippine equivalent of the IRS in the United States. Companies are required to withhold taxes from employees who are subject to income tax. They are then required to remit these taxes to the BIR.

There are two broad classifications of withholding taxes: Creditable withholding taxes and final withholding taxes. Creditable withholding taxes apply for certain income payments and are creditable against income tax. On the other hand, Final Withholding Taxes are not creditable against withholding taxes. Unlike the former, final withholding taxes are prescribed on royalties and interest incomes.

Social Security Service (SSS)

The SSS is the social security net for Filipinos. It covers a list of contingencies: from disabilities to maternity. All private companies are required to register with the SSS and deduct contributions for their employees. Around 70% of the contribution comes from the employer and 30% from the employee.

Deductions are made from the employee’s salary and remitted to the SSS. Payments are done monthly or quarterly, based on the type of employee. The summary on benefits and schedule on payments is posted here.

PhilHealth

The health insurance institution in the Philippines is called PhilHealth. All private and government institutions are required to register and deduct contributions from their employees’ salaries. PhilHealth covers a number of benefits. The share of the contribution is split between the employer and the employee. The payment dates and contribution schedule are available here.

Pag-IBIG – Home Development Mutual Fund

The final contribution that employers need to be aware of is Pag-IBIG. This institution provides housing finance for Filipinos. Contributions by the employer are equal to 2% of the employee’s salary. The dates for payment are in this link.

These are the 4 major tax and employer contribution laws that Payroll and Human Resource administrators should be aware of. At PayrollHero, we deduct the required contributions and generate payroll for our clients. Here are examples of how we compute BIR taxes, SSS, PhilHealth and Pag-IBIG contributions.

For more information on BIR, SSS, PhilHealth and Pag-IBIG with respect to what forms need to be filled and filing deadlines, make sure to click on the links!

Disclaimer: As always, consult your lawyer or accountant for advice! We are here to help, but your specific situation should be reviewed by a professional with complete knowledge of your situation.

If you are in need of a payroll provider in the Philippines that can provide an end to end solution, then let us know. PayrollHero’s Philippine cloud based payroll platform incorporates, time, attendance, scheduling, HRIS, business intelligence and Philippine payroll in one, easy to use solution.
Cloud Payroll Software for Philippines

Part I: Employee Contributions in the Philippines: BIR and SSS

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As an HR admin or payroll admin, it is important to understand how employee contributions work for the social security nets that are in place for Filipinos. There are 4 institutions that you should know about for employee contributions:

  1. Bureau of Internal Revenue (BIR)
  2. Social Security System (SSS)
  3. Philhealth
  4. Home Development Mutual Fund

We will be talking about each of these over the next few blog posts. Let’s start with the first:

Bureau of Internal Revenue

When you are employing someone in the Philippines, the first requirement is to have a Tax Identification Number (TIN) that is registered in the same Revenue District Office (RDO) as your business. The TIN is essential in order to process employee contributions.

  • If the employee does not have a TIN, she must file form 1902 at the RDO where your business is registered.
  • If the employee does have a TIN but is not registered in the same RDO as your business, then she must fill form 1905 and file it at the RDO where her previous employee was registered in order to cancel it.
  • If the employee has a TIN registered at the same RDO as your company’s, then you will have to file form 2305 at the same RDO to update your employee’s information.

Here are all the BIR forms for your convenience.

Social Security Service

All employees in private companies across the country are required to be SSS members. The social security net covers a range of contingencies such as disability, sickness, retirement. Here is a summary of contingencies that the SSS covers. Around 70% of the contribution towards the SSS is made by the employer while 30% is made by the employee. Here is a schedule of contributions based on monthly salary.

First, you need to register your company as an employer in the nearest SSS office by filing Form R1. Along with this, you need to submit a list of employees with their SSS numbers. Note that private companies can only hire employees with SSS numbers. The form that needs to be files is Form R1A. The last form that needs to be submitted is the Specimen Signature Card SS Form L501. With these 3 forms, you will have to submit a sketch of your business address.

You will also have to pay a fee of PHP 160 for an Employer Registration Plate at the SSS or any SSS accredited bank. The list of accredited banks are here (at the bottom of the document). Along with the payment, you need to submit validated Miscellaneous Payment Return – SS Form R6 along with a Special Bank Receipt with this form.

You need to submit Form R1A – the Employment Report – every time a new employee joins. It must be filed within thirty days of the employee receiving the benefits of the coverage. The form must be submitted with the Specimen Signature Card and the 13 digit ER number and business address.

If there are changes to business operations, you need to file an Employer Data Change Request. This way, you will be billed correctly by the SSS.Singapore Payroll

Now that you know what these institutions are and what forms need to be filled, here is our example on how SSS contributions are calculated using PayrollHero software. As a bonus, we also have an example on how BIR taxes are computed.

That’s it for now! Check out our next few posts on Philhealth and Home Development Mutual Fund to find out everything you need to know about employer contributions.

Disclaimer: As always, consult your lawyer or accountant for advice! We are here to help, but your specific situation should be reviewed by a professional with complete knowledge of your situation. 

If you are interested in learning more about PayrollHero for your Philippine business, check out our website at PayrollHero.ph. We would be pleased to chat further about your needs.
Cloud Payroll Software for Philippines

Singapore Corporate Taxes 102: Auto Inclusion Scheme

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pablo

Our Singapore Corporate Tax lessons are back! (I know what you’re thinking… nothing says exciting like taxes). This time we’ll be talking about how employers in Singapore should handle tax forms for their employees. The IRAS is trying to digitize the entire system by introducing the Auto Inclusion Scheme this year and linking it to CPF contributions. In short, filing tax returns is going to be a smoother, more integrated process.

Under the Income Tax Act, there are four forms that employers should be aware of:

  1. Form IR8A: This is to declare income of all employees
  2. Appendix 8A: This form should be completes if the employee is provided with benefits-in-kind unless these benefits are exempted from Income Tax
  3. Appendix 8B: If the employee has benefited from any Share Ownership Plans, then this needs to be completed
  4. Form IR 8S: Must be completed if excess CPF contributions are made by the employer.

Explanatory notes on each form are here. Income tax returns must be filed for the following people:

  1. Full time resident employees
  2. Part time resident employees
  3. Non-resident employees
  4. Company director (including a non-resident director)
  5. Pensioner and
  6. Employees who have left the organisation within the financial year

For your reference, here are the tax rates for different income brackets:

Taxable Income Bracket Total tax on income below bracket Tax rate on income in bracket
0-20,000 0 0
20,001-30,000 0 2
30,001-40,000 200 3.5
40,001-80,000 550 7
80,001-120,000 3,350 11.5
120,001-160,000 7,950 15
160,001-200,000 13,950 17
200,001-320,000 20,750 18
>320,001 42,350 20

The Auto Inclusion Scheme is a system for recording employee income and tax related information for companies with 12 or more employees for the entire year, ending 31 December 2014. Companies have to submit employee information to IRAS electronically by March 1st of every year, starting from 2015. This way, companies do not need to distribute hard copies of the above forms for employees to file their income tax returns.

If employers use payroll software to generate payroll, then the software can be used to submit files to AIS using another (free) software provided by the IRAS called the Validation and Submission Application. The payroll software should meet the IRAS file format specifications in order to submit forms. The Validation and Submission Application software can be downloaded here.

Once every employee’s details are filled in through AIS, companies should inform their employees to file their tax returns through the myTaxPortal. Employees no longer need to fill in their income and details from the four forms above because the AIS system already has it stored.

Employers who have fewer than 12 employees are also encouraged to use the AIS by filling out this form and emailing it to ais@iras.gov.sg. After submitting the form, companies will also have to go through a trial exercise before joining the AIS.

The AIS system can be linked to CPF Data in order to fill up Form IR 8S easily. The system makes for smooth functionality across the IRAS and CPF platforms. To sign up for the AIS and CPF Data Link-up Service from 2016, this application form must be filled. For existing AIS members who want to use the CPF Data Link-Up Service, this application form must be filled.

Hope this helps! If you want to know how to pay up CPF contributions, we’ve got you covered. More on Tax Clearance and CPF contributions later.

Disclaimer: As always, consult your lawyer or accountant for advice! We are here to help, but your specific situation should be reviewed by a professional with complete knowledge of your situation. 

Part I on Cloud Computing: 3 Reasons Why Your Business Should Use Cloud Computing Now

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cloud computing Cloud Computing, by definition, is “the practice of using a network of remote servers hosted on the Internet to store, manage and process data, rather than a local server or a personal computer.”

Let’s be honest, that sounds terribly boring. And you’re probably wondering: I don’t even know what half of that means.

As an intro to cloud computing, take a look at the infographic we have for you. Now, let’s talk about why your business needs to upgrade its IT infrastructure and adopt cloud computing with arms wide open. Using cloud computing services helps you increase efficiency, cut down on costs, and change the way you do business.

  1. Demand-Supply management: Cloud computing gives you the opportunity to be ridiculously client focussed using big data and data analytics. Imagine owning a gaming store that sold console games. If Game A was trending that week and Game B was not doing so well, data analytics would allow you to identify that trend, allowing you to stock up accordingly. Not only would you improve sales, you would manage inventory better and improve your turnover rates. For your business to be flexible and sustainable, you need solid data to back up your decisions. Cloud computing offers insight into your customer’s preferences. Using this data will give you the competitive advantage that you need.
  1. Cost reductions:
  • By using the Cloud, you can cut costs by moving from the CAPEX model to the OPEX model. This is particularly useful for companies that have a high debt burden. Initial capital expenditure on IT assets or building your IT infrastructure is not fully deductible, which leads to higher taxes. On the other hand, operating expenses on running services through the cloud are fully tax deductible. By moving your system to the cloud, you will be able to free up capital for other investments.
  • There is another benefit to cloud computing on your balance sheet. Think about the IT infrastructure you have set up for your business. You have 10 servers that work perfectly well on a regular basis. All of a sudden, during a special discount that you are promoting through your website, you notice greater traffic. Now you need 5 more servers to sustain the traffic. However, the investment is too expensive for the limited amount of time that you are using it for. If you could rent and pay for servers for just a short period of time, wouldn’t that make more sense than investing in assets that will not pay off in the long run?
  1. Remote-monitoring: This one is easy. By using the Cloud, you can access your company’s data anywhere and at any time. When you’re on that much needed holiday in the tropics, your spreadsheets back home will be of no use to you. With Cloud Computing, you can get back to your business at a moment’s notice and respond to any emergency, all this while sipping on some mai tais and preparing for the beach volleyball game.

Now, if you already knew all of the above, then you have probably contemplated the next question. What about security? We understand, recent security breaches that have led to disasters for some companies do not instil confidence in what we are talking about. Sensitive information is at risk when you are using Cloud Computing. But here is what’s important for your business: if IT is not your core competency, then no matter how much you invest in security, a company that rents out servers probably has a more secure system in place. Again, this is about how you want to use your resources to focus on your business.

Singapore is a great example on how Small to Medium sized Businesses (SMBs) have adopted cloud computing. Cloud Comrade, a company that provides solutions on cloud management, says that around 63% of businesses in Singapore turn to companies like Cloud Comrade for cloud technology solutions. Singapore is one of the fastest adopters of cloud computing services.

Altogether, the reasons for cloud computing, especially for SMBs was put very simply by Pavel Ershov, Parallels’ vice president of service providers business for the Asia Pacific and Japan regions:

“SMBs today have the best of both worlds to help them grow their businesses–cloud services offerings with enterprise-grade capabilities at affordable costs”

Want to learn more about PayrollHero? Check out our country specific websites:
Singapore, Philippines, Malaysia, Indonesia, Thailand | Canada, USA

 

Singapore Corporate Taxes101

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Singapore Corporate Taxes101Filing taxes can be a daunting task. Figuring out deductions and what your company is exempted from is complicated enough before you realise that it’s a new financial year, the rules have changed, and now you’re not under the same tax exemptions anymore. We looked around the interwebs for a while and we were stumped. So we decided this problem needs to be fixed.

Over the years, the Singapore government has tried to make the country a tax friendly one for corporates. With a bunch of nifty exemptions, retailers, restauranteurs and growing businesses can breathe a sigh of relief. The government’s got your back. Let’s get down to some important pointers for you to file taxes for your company.

Important Facts:

  1. Rate: The current corporate tax rate is 17%.
  2. Dates:
    • Within 3 months of the company’s financial year end, the Estimated Chargeable Income document must be filed and submitted
    • Every year in April, the IRAS sends Forms C-S or Form C filing package.
    • 30 November: The Paper version of the Corporate Income Tax Form (Forms C-S or Form C) must be submitted. 15 December: The e-File Form of the same document must be submitted. Either the paper or the electronic version must be submitted.
    • FormIR8A, which is a statement of an employee’s remuneration, must be issued for each employee by 1 March of every year.
    • Your company needs to keep records of transactions for a minimum of 5 years. They must be submitted to IRAS upon request.
  3. Use mytax.iras.gov.sg to file your company’s taxes, check or post objections to your tax assessment and apply for exemptions.
  4. Taxes can be paid via internet banking, SAM, AXS station, Cash/NETS or GIRO.

Estimated Chargeable Income: Are you exempted?

The ECI is used to estimate your company’s taxable income. The IRAS notifies you before your ECI file is due. However, as a tax break, if your ECI is zero or your annual revenue is $1 million or less, then you do not have to submit the ECI, even if you have received a notification for it.

The ECI can be filed at mytax.iras.gov.sg. The government will then notify you on the exact tax amount which you have to pay within a month of the notice.

Corporate Income Tax Form

This is the big one. Here is where you declare your actual income in the financial year. It needs to be filed regardless of what your income looks like. There are two types: Form C-S and Form C. For a company with revenue not more than $1 million, Form C-S must be filed.

Exemptions

This is the part we have all been waiting for. With these exemptions, the government makes it easier on a start-up’s cashflows for a few years at least. Go through it because there is some good news for retailers as well.

Tax Exemptions for Start-ups: Start-up companies enjoy 100% tax exemption for the first $100,000 of chargeable income for 3 years. Another 50% exemption can be exercised on the next $200,000 which effectively means the tax rate is 8.5%.

Partial Tax Exemption: From the fourth year onwards, start-ups can exercise the Partial Tax Exemption. Here, 75% of the first $10,000 is exempted and another 50% on the next $290,000 is exempted.

Expenses before starting your business: The government also exempts taxes on expenses incurred the year before your company’s financial year in which you start your business. For example, if you financial year starts in Jan 1 2014 and your first earnings were on June 1 2014, then you will be exempted on paying taxes for expenses incurred between Jan 1 2013 and Dec 31 2013.

Capital Allowances: This one is great for retailers. You are given a capital allowance on fixed assets like electrical equipment, furniture and other fixtures for you company. This is in place of depreciation which is non-deductible.

E-Commerce

Retailers that create income through e-commerce websites have a set of rules that they need to follow. For a franchisee or a branch in Singapore with a franchisor based in a foreign country, the income generated by a website is not liable to taxation in Singapore. This is true even is the company’s customers are in Singapore or not. Check the links below for more details on taxation on e-commerce-centred business.

We hope this was helpful to you! We have put in some great links with guides to fill up your corporate tax forms. Do comment or drop in your email for more handy information!

Basic Corporate Tax Calculator: https://www.iras.gov.sg/irashome/page.aspx?id=6784

Disclaimer: As always, consult your lawyer or accountant for advice! We are here to help, but your specific situation should be reviewed by a professional with complete knowledge of your situation. 

Getting a Liquor Licence in Singapore

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drinks_0

Speaking with a few entrepreneurs who are setting up a new F&B outlet here in Singapore, I found that a few shared similar problems- mostly about the liquor licence for their restaurant and how to go about getting it.

We though it will be helpful to provide a guide to getting the liquor licence for your new establishment.

Before Sending your Application

It’s good to have the required paper work in order before applying for the liquor licence. You will need to be in compliance with laws & regulations from the relevant authorities and get approval for your establishment. Find out if your premises are approved for F&B here. 

Liquor Licence Fast Facts:

  • License agency: Liquors Licensing Unit
  • Cost Of Licence: S$220 – S$1,760 (2-year licence)
  • Minimum Licence Processing Time: 14 working days

Got it? Great! Let’s get into the necessary details. 

There are 2 types of liquor licences available in Singapore. If you are carrying out any of these activities:

  • To retail intoxicating liquor which is consumed on your premises (e.g. pubs, clubs, discos and hawker stalls)
  • To retail and/or wholesale intoxicating liquor that is consumed off your premises (e.g. wine specialty shops, alcohol importers and food caterers)

For more than 30 consecutive days, you will need to obtain liquor licence for your establishment.

If your activities is shorter than 30 consecutive days (1-30 days), you can apply for a temporary liquor licence instead.

Should your activities do not run on consecutive days, you will need to obtain more than one liquor licence for operation.

The Licence Fees

Types Of Liquor Licences
Licences for liquor sold and consumed on your premises
Name Of Licence Permitted Hours Licence Fees
(2-Year Licence)
Public House Licence 1st Class
(6am-12am)		 S$1,760
2nd Class
(6am-10pm)		 S$1,320
Beer House Licence 6am-12am S$920
Outdoor Beer Stall Licence 6am-3am
(Permitted hours to be decided based on the location)		 S$570
Licences for liquor sold and consumed off your premises
Retail Liquor Shop Licence 6am-12am S$220
Wholesale Liquor Shop Licence 6am-12am S$220
Retail Beer Shop Licence 6am-12am S$220
Wholesale Beer Shop Licence 6am-12am S$220

Note that the licences only permits you to sell liquor within the stipulated hours. If your establishment requires sale of alcohol past these hours, you will need to get the Liquor License (Extension of Operating Hours).

Application, Processing Time and Payment Method 

All applications for liquor licence are to be submitted through electronic filing (e-filing) via the Online Business Licensing Service (OBLS) at http://business.gov.sg.

The processing time for these licences takes up to 12 working days.

There are three online payment modes available-
Credit card (Visa or Mastercard), Direct Debit through your internet banking account. Payment modes available at our counter are NETS or cheque.
If the amount payable is more than S$2000/-, payment by cheque is preferable.

Was this post helpful? Let us know by writing a comment.

Be in touch with us. Find out how you PayrollHero can improve productivity for your business with our time, attendance, scheduling and payroll management system in the cloud.

How To Compute Philippine BIR Taxes

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PayrollHero’s Philippine payroll platform enables payroll administrators from all over the Philippines to quickly and easily run payroll for their organizations. We get many emails from employees asking how to compute their BIR taxes or if their taxes have been calculated correctly. Here is a quick example of how it works and how you can double check your Philippine payroll numbers.

What are the 2013 Holidays in the Philippines?

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PRHCLOUDWhat are the Holidays in the Philippines for 2013?

The Philippines has a few holidays that are broken up into Special and Regular Holidays.  You can see the Proclamation from the President of the Philippines here.

Here are the 2013 Regular Holidays:

New Year’s Day – January 1st 2013
Maundy Thursday – March 28th 2013
Good Friday – March 29th 2013
Labor Day – May 1st 2013
Independence Day – June 12th 2013
National Heroes Day – August 26th 2013
Bonifacio Day – November 30th 2013
Christmas Day – December 25th 2013
Rizal Day – December 30th 2013

Here are the 2013 Special (Non-Working) Holidays:

Black Saturday – March 30th 2013
Ninoy Aquino Day – August 21st 2013
All Saints Day – November 1st 2013
Additional Special (Non-Working) Day – November 2nd 2013
Additional Special (Non-Working) Day – December 24th 2013
Last Day of the Year – December 31st 2013

Special Holiday (for all schools):

EDSA Revolution Anniversary – February 25th 2013

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You can see the complete details of the 2013 Philippine holidays here.

Keep in mind some of the provinces, cities and towns have their own holidays so depending on where your office is will depend on if you need to observe those. (example)

Click here for more details on PayrollHero’s Philippine Payroll

How is the BIR Tax Deduction Computed?

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“The Bureau of Internal Revenue is an attached agency of Department of Finance. BIR collects more than one-half of the total revenues of the government.” *wikipedia

PayrollHero makes it quick and easy to compute the numbers for the BIR tax deduction for your employees in the Philippines.  You can see how this works in more detail here.