Payroll Processing across Asia-Preview

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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 andVietnam (countries
with large populations and 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 BRIEFING
Issue 7 • January and February 2014
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