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  • Employee Compensation Paid in Cryptocurrency Is Subject to Income Tax Withholding in New Zealand

    by Nic Gonzales | Sep 09, 2019
    The New Zealand Commissioner of Inland Revenue has issued a pair of binding rulings (BR) under Section 91D of the Tax Administration Act of 1994 stating that the payment of remuneration to an employee in crypto-assets (e.g., Bitcoin) will be treated as part of the employee's salary or wages and is therefore subject to Pay as You Earn (PAYE) withholding.

    BR Pub 19/01 provides that the payment of remuneration to an employee in crypto-assets as part of the employee's regular remuneration will be treated as part of the employee's salary or wages and is subject to PAYE. In BR Pub 19/02, the Commissioner ruled that the payment of incentives or bonuses in crypto-assets to an employee arising from employment is also subject to PAYE.

    The rulings apply only where the crypto-assets being paid: are not subject to a “lock-up” period; can be converted directly into a fiat currency (on an exchange); and either a significant purpose of the crypto-asset is to function like a currency or the value of the crypto-asset is pegged to one or more fiat currencies. Commentary to the rulings explains that a Fringe Benefits Tax (FBT) applies where it is determined that the payment is not assessable income subject to PAYE withholding. Payments of crypto-assets not subject to PAYE are fringe benefits subject to FBT.

    BR Pubs 19/01 and 19/02 appear in the Inland Revenue Department’s Tax Information Bulletin for August (Issue 7, Vol. 31, August 2019).
  • United States, France Agree on Foreign Tax Credits

    by Nic Gonzales | Aug 09, 2019
    In June, the United States and France reached an understanding that the French Contribution Sociale Generalisee (CSG) and Contribution au Remboursement de la Dette Sociate (CRDS) taxes are not social taxes covered by the totalization agreement between the countries [IRS Totalization Agreements, French Contribution Sociale Generalisee (CSG) and Contribution au Remboursement de la Dette Sociate (CRDS)].

    The IRS said it will not challenge foreign tax credits claimed by individual taxpayers, for CSG and CRDS payments on the basis that the totalization agreement applies to those taxes. However, U.S. employers may not file for refunds claiming a foreign tax credit for CSG/CRDS withheld or otherwise paid on behalf of their employees.

    Individual taxpayers have 10 years to file a claim for a refund of U.S. tax for a foreign tax credit. The 10-year period begins the day after the regular due date for filing the return (without extensions) for the year to which the foreign taxes relate. In this case, amended returns claiming foreign tax credits for CSG and CRDS payments going back to tax year 2009 may be filed.

    The United States and France signed a totalization agreement in 1987. Generally under these agreements, a worker who is sent by an employer in one country to work in the other country for five or fewer years remains covered only by the sending country’s social security program. The agreements include additional rules that eliminate dual coverage in other work situations (e.g., airline and maritime workers). The agreement also helps to eliminate situations where workers suffer a loss of benefit rights because they have divided their careers between the two countries.
  • HMRC Warns of U.K. Scam Threatening Fines for Late Payments

    by Nic Gonzales | Jul 11, 2019

    HM Revenue and Customs (HMRC) warned customers about a telephone scam involving threats of fines for late payments after customers have already made these payments [Security Update – HMRC Scam].

    How the Scam Works
    Customers receive a call from a scammer posing as an HMRC agent approximately a week after making their normal payments. The scammer informs them their payment was late, and customers will receive a fine. When customers check and confirm the payment had been made, the scammer says the payment was made to the wrong account. The scammer tells customers to make the payment again to the “correct” account to avoid fines, and the payment will be refunded into their account. The scammer provides beneficiary information to the customer, including a new bank account number and sort code. Customers become aware of the fraudulent activity when their bank flags the suspicious transaction shortly after the second payment is made.

    Reporting HMRC scams
    HMRC has a webpage informing customers how to report suspicious emails, phone calls, and text messages. There are also examples of phishing emails and other scams. Victims of these scams should report them to Action Fraud. To help HMRC investigations, email the full details of the scam to [email protected] (i.e., date of the call, phone number used, and content of the call).

  • Global Vision Award Winner

    by Mark Havelka | May 28, 2019
    The Second recipient of Global Payroll Management Institute’s (GPMI) Global Vision Award winner for 2019 is Kira Rubiano, Head of International Payroll Division and U.S. Operations of Auxadi. Kira’s #Passionforpayroll is exceptional and only equalled by her global payroll knowledge!

    You will see within minutes of listening to this short episode of The Payroll Podcast exactly why she won the prestigious Global Vision Award as Kira’s passion and expertise shines through! We talk about the Global Payroll Management Forum and APA Congress, Kira’s experience of the expo, the countries that cause the most challenges, cross-border payment difficulties, bureaucratic governments, and exactly why people get so confused by global compliance programs.

    This is one episode of the payroll podcast you won’t want to miss and it was a great experience to sit face-to-face with such a worthy and knowledgeable global payroll winner!

    Access the podcast.
     
  • New Income Tax Rates for Wales Effective 6 April 2019

    by Mark Havelka | May 22, 2019

    Beginning in April 2019 the Welsh Government will decide each year the rates of income tax paid by Welsh taxpayers. The Welsh Government could vary the Welsh income tax rates or elect to keep them the same as the rates paid by taxpayers in England and Northern Ireland. On 5 April 2019, HM Revenue and Customs (HMRC) announced the income tax rates for persons living in Wales for the tax year beginning 6 April 2019 [HMRC News Update, 5 April 2019].

    Range of Allowable Adjustments

    From April 2019, the United Kingdom has reduced the three rates of income tax paid by Welsh taxpayers as follows:

    • basic rate from 20% down to 10%
    • higher rate from 40% down to 30%
    • additional rate from 45% down to 35%
    It was up to the Welsh government to decide the Welsh rates of income tax that would be added to the reduced U.K. tax rates. Ministers are able to adjust the income tax rate by 10 pence for every one pound (10%) for each rate. Moreover, 10 pence per pound in each rate (10%) will go directly to the Welsh Treasury to be spent on public services in Wales, rather than coming to Wales through the U.K. government.

    Rates for 2019 to 2020

    Wales decided that income tax rates are staying the same for 2019-2020. This means that the basic rate in Wales remains at 20%, with 10% going to the U.K. and 10% going to Wales. At the higher rate of 40%, 30% will go to the U.K. and 10% to Wales. If the additional rate of 45% applies, 35% will go to the U.K. and 10% to Wales.

    The rates of tax on dividends and savings interest are the same for those living in Wales as they are for the rest of the U.K.

    Persons Subject to the Welsh Rates

    Persons living in Wales will be paying the Welsh rates. Persons moving to or from Wales will only pay Welsh rates if they live in Wales longer than anywhere else in the U.K. during a tax year, which starts on 6 April and runs through 5 April in the following year.

    Collection of the Tax

    HMRC will continue to collect income tax from Welsh residents through the Pay as You Earn (PAYE) system. HMRC will add a C to the start of the tax code for residents of Wales so that the correct rates of income tax will be paid.

    Beginning in April 2019 the Welsh Government will decide each year the rates of income tax paid by Welsh taxpayers. The Welsh Government could vary the Welsh income tax rates or elect to keep them the same as the rates paid by taxpayers in England and Northern Ireland. On 5 April 2019, HM Revenue and Customs (HMRC) announced the income tax rates for persons living in Wales for the tax year beginning 6 April 2019 [HMRC News Update, 5 April 2019].

    Range of Allowable Adjustments

    From April 2019, the United Kingdom has reduced the three rates of income tax paid by Welsh taxpayers as follows:

    • basic rate from 20% down to 10%
    • higher rate from 40% down to 30%
    • additional rate from 45% down to 35%
    It was up to the Welsh government to decide the Welsh rates of income tax that would be added to the reduced U.K. tax rates. Ministers are able to adjust the income tax rate by 10 pence for every one pound (10%) for each rate. Moreover, 10 pence per pound in each rate (10%) will go directly to the Welsh Treasury to be spent on public services in Wales, rather than coming to Wales through the U.K. government.

    Rates for 2019 to 2020

    Wales decided that income tax rates are staying the same for 2019-2020. This means that the basic rate in Wales remains at 20%, with 10% going to the U.K. and 10% going to Wales. At the higher rate of 40%, 30% will go to the U.K. and 10% to Wales. If the additional rate of 45% applies, 35% will go to the U.K. and 10% to Wales.

    The rates of tax on dividends and savings interest are the same for those living in Wales as they are for the rest of the U.K.

    Persons Subject to the Welsh Rates

    Persons living in Wales will be paying the Welsh rates. Persons moving to or from Wales will only pay Welsh rates if they live in Wales longer than anywhere else in the U.K. during a tax year, which starts on 6 April and runs through 5 April in the following year.

    Collection of the Tax

    HMRC will continue to collect income tax from Welsh residents through the Pay as You Earn (PAYE) system. HMRC will add a C to the start of the tax code for residents of Wales so that the correct rates of income tax will be paid.
  • U.K. Double Taxation Treaty Plans for 2019

    by Mark Havelka | Apr 09, 2019
    HM Revenue and Customs (HMRC) has announced the details of the U.K.’s treaty negotiating priorities for 2019. This year, HMRC will begin negotiations on double taxation treaties with New Zealand, Peru, and Sri Lanka. The tax agency will also continue double taxation treaty discussions with 11 other countries [HMRC, Policy Paper, Planned Negotiations on Double Taxation Agreements for 2019, 4 March 2019].

    Double taxation treaties
    A double taxation treaty is an agreement designed to protect against the risk of double taxation where the same income for a business or individual is taxable in both countries. The U.K. maintains a list of current tax treaties with other countries and regions. This website contains details about the agreements along with the actual agreements and any amendments made to them.

    Discussions with New Zealand, other countries
    HMRC plans to enter into discussions with many countries and regions to update its double taxation treaties. HMRC plans to begin negotiations with three countries: New Zealand, Peru, and Sri Lanka. HMRC will also continue discussions on double taxation treaties with 11 countries: Costa Rica, Ghana, Greece, Kazakhstan, Lebanon, Luxembourg, Malawi, Nepal, Portugual, Romania, and Russia.

    Since 1 January 2018, HMRC has signed new agreements and many have entered into force. There are new agreements with four countries: Austria, Cyprus, Israel, and Mauritius, and three crown dependencies: Guernsey, Jersey, and the Isle of Man. The following agreements have entered into force: Austria, Australia, Belarus, Cyprus, Guernsey, Isle of Man, Jersey, Lesotho, Mauritius, and Uzbekistan.
  • Introducing the Deloitte Payroll Benchmarking Survey 2019

    by Nic Gonzales | Apr 03, 2019

    What?
    Deloitte, the APA and the Global Payroll Management Institute (GPMI) are excited to announce our collaboration on providing the most robust and comprehensive payroll benchmarking survey in the market. The survey, Deloitte Payroll Benchmarking Survey 2019, will be driven by Deloitte and solely sponsored by the APA and the GPMI.

    Why?
    The survey will provide insights into your payroll operations, as well as the operations of your peer organizations, whether domestic or global, helping you to make actionable decisions that improve employee experience, compliance, accuracy, efficiency and enabling technology. The future of the enterprise, the workforce and how work gets done is changing quicker than most organizations can keep up, and the payroll function is not immune. As enabling technology advances in areas such as robotic process automation, artificial intelligence, machine learning and social collaboration, it provides organizations with a unique opportunity to transform its operations, leveraging these next generation technologies. Insight into other payroll functions can be extremely valuable in informing and guiding your own organization’s efforts.

    When?
    The survey will be introduced at the 2019 37th Annual Congress, in Long Beach, California, and reviewed in detail during our break out session on Thursday May 16th from 2:15 p.m. to 3:45 p.m. If you are considering taking the survey or simply want to hear more about it and how it can be used to help improve your payroll operations, be sure to sign up. You can also stop by Deloitte’s booth (Booth #720) and meet members of the Deloitte payroll leadership team.

    After Congress, you will have 2 weeks to prepare before the opening of the survey on June 3rd. This survey opens on June 3 and will close on September 20. The results will be provided back to all who participated in late fall 2019. Once results are published, Deloitte will hold a series of webinars to present our key findings and insights.

    To Sign-up?
    Sign up now to receive the survey when it is opened on June 3rd.

    For additional information on Deloitte’s Global Payroll Capabilities please visit our HR Transformation Practice website.

  • Australia Expands Single Touch Payroll – Will There Be Implications for State/Territory Payroll Taxes?

    by Nic Gonzales | Mar 28, 2019

    Beginning 1 July 2019, Single Touch Payroll (STP) in Australia is being extended to small employers with 19 or less employees. This was subject to legislation, which was enacted in February. The STP expansion could lead to a focus on state and territory payroll taxes for all employers [Australian Tax Office, News Release, 8 March 2019].

    STP began last year
    STP went into effect 1 July 2018 for large employers (20 or more employees). It is a government initiative requiring employers to report all payments, pay-as-you-go (PAYG) tax, and superannuation information to the Australian Tax Office (ATO) at the same time the employees are paid from their payroll solution. Additionally, there is a requirement to provide new employee details to the ATO before employees are paid. See the GPMI news release, Single Touch Payroll in Australia Coming July 2018.

    There will be a three-month transition period for small employers. They can start STP reporting any time from 1 July – 30 September. “This is a gradual transition, and we are providing flexible options,” says the ATO. “If you’re an employer with four or less employees you will have additional options.”

    State and territory payroll taxes
    Interestingly, the STP change for small employers could lead to a focus on state and territory payroll taxes for all employers. These taxes are assessed on employee wages when the total bill of an employer (or group of employers) exceeds a threshold amount. It is payable in the Australian state or territory where the services were performed. Each state or territory has a different tax rate and threshold as well as registration process. Payroll taxes are paid to the state and territory revenue offices (on a monthly, quarterly, or annual basis).

    There is a perception that many small businesses are simply not aware of state and territory payroll taxes. Even for large employers in Australia, payroll taxes can be complicated and may require payroll departments to work closely with their accounting and tax groups to make sure they are in compliance.

  • Launch of the First APAC Chapter of the Global Payroll Management Institute in Pune, India

    by Nic Gonzales | Mar 14, 2019
    Neeyamo is pleased to announce its association with the Global Payroll Management Institute (GPMI) in launching its maiden chapter in the APAC region. The launch took place at Neeyamo's Global Delivery Center in Pune on Feb. 26, 2019. The chapter had representative members from payroll practitioners including CHROs, CFOs, leaders among the global payroll fraternity and several other interested parties. The voluntary body is geared to share best practices in global payroll, and further provide a platform for its members to network.

    As its first overseas venture, the GPMI India Chapter aims to propagate knowledge on Global Payroll for payroll professionals in India. The chapter will act as a forum for the payroll community to open up windows of opportunity for professionals to network, learn about newer developments in the field, share their knowledge & insights, discuss and identify common payroll barriers across industries and seek resolutions.

    Dan Maddux, Executive Director, American Payroll Association said, "All of us at the Global Payroll Management Institute are ecstatic to have launched our first Chapter in the APAC region of the world. The official launch of the GPMI India Chapter is a significant milestone, as local Chapters are the heart and soul of professional organizations and we are thrilled that payroll professionals in India will reap the benefits of Chapter collaboration. Together, we will share and support the common goals of expanding global payroll knowledge and education to GPMI affiliates throughout India and the world."

    Mary Holland, Global Director Strategy, Development and Training said, "I'm excited to work with the first GPMI chapter in India. I'm confident we will create a community where global payroll professionals can increase their knowledge, network with peers from around the world, and enhance their global payroll career."

    Ranga Seshadri, CEO at Neeyamo and President of the India Chapter said, "It gives me immense pleasure to be joining hands with Global Payroll Management Institute in this initiative. It is going to be our constant endeavor to forefront initiatives that bring transformation in the payroll arena opening up windows of opportunity for professionals to network, learn about newer developments in the field, share their knowledge & insights, discuss and identify common payroll barriers across industries and seek resolutions."
  • Netherlands Shortens Length of Time for Expatriate Tax Free Allowance in 2019

    by Nic Gonzales | Mar 04, 2019

    The Netherlands 2019 Tax Plan was approved by the Dutch Senate on 18 December 2018. It includes a reduction in the maximum period of time to which the expatriate rule applies (the “30% ruling”) from eight years to five years. The change is effective 1 January 2019.

    What is the 30% ruling?

    “Specialist” expatriates (individuals who have specialized skills or knowledge that are not readily available in the Dutch labor market) can get a tax free allowance of up to 30% of total compensation (called the 30% ruling) for a maximum period of time (it had been eight years). Expatriates apply for the 30% ruling with the Dutch tax office, called the Belastingdienst. After 60 months the Dutch tax office may require proof that the specialist test is still being met by the individual. The allowance provides relief for additional costs typically incurred by expatriates living abroad (e.g., housing costs, travel costs, costs for visas).

    Maximum period reduced, transition rules

    Effective 1 January 2019, the maximum period for the 30% ruling has been reduced to five years from eight years. There are transitional rules for current specialist expatriates until 1 January 2021:

    • If the original end date of an employee’s 30% ruling is in 2019 or 2020, there is no change and the original end date will continue to apply.
    • If the original end date of an employee’s 30% ruling is in 2021, 2022, or 2023, the 30% ruling will end on 1 January 2021. This means the employee has the tax free allowance of up to 30% of total compensation until 31 December 2020.
    • If the end date of an employee’s 30% ruling is in 2024 or later, the 30% rule will end three years earlier than had been expected.
  • Vietnam Hikes Minimum Wages by 5.3 Percent in 2019

    by Nic Gonzales | Jan 02, 2019

    Vietnam’s National Wage Council has increased the minimum wage by an average of 5.3 percent in 2019. The hike, which is the lowest compared to previous years, will increase the minimum wage in the four regions by US$7-9 per month. In 2018, the increase was 6.5 percent, while in 2017 the minimum wage was hiked by 7.3 percent.

    Representing the employees, the Vietnam General Confederation of Labor (VGCL) proposed an increase of at least 6.1 percent, while the Vietnam Chamber of Commerce and Industry (VCCI) which represents the employers, proposed an increase of 5.1 percent. After discussions with the National Wage Council, all parties agreed on 5.3 percent.

    Minimum wage increase

    In 2018, minimum wages were increased by 6.5 percent and ranged from VND 2.76 million (US$118) to VND 3.98 million (US$171). In 2019, the new minimum wages will range from VND 2.92 million (US$126) to VND 4.18 million (US$180).

    Region 2018 monthly minimum wage Hike 2019 monthly minimum wage
    Region I VND 3,980,000 (US$ 171) &VND 200,000 (US$ 8.6)td> VND 4,180,000 (US$ 180)
    Region II VND 3,530,000 (US$ 152) VND 180,000 (US$ 7.8) VND 3,710,000 (US$ 159)
    Region III VND 3,090,000 (US$ 133) VND 160,000 (US$ 6.9) VND 3,250,000 (US$ 140)
    Region IV VND 2,760,000 (US$ 118) VND 160,000 (US$ 6.9) VND 2,920,000 (US$ 125)

    • Region I covers urban Hanoi and Ho Chi Minh City
    • Region II covers rural Hanoi and Ho Chi Minh City along with urban Can Tho, Da Nang, and Hai Phong
    • Region III includes provincial cities and the districts of Bac Ninh, Bac Giang, Hai Duong, and Vinh Phuc provinces
    • Region IV covers the remaining localities
    Cost of living

    VGCL which represents the employees conducted a survey in 2018 which included 3,000 laborers in 150 different businesses in Vietnam.

    According to the survey results, 26.5 percent of the laborers said that they were “barely getting by”, while 12.5 percent said their wages were not enough to support their family. Around 44 percent of the surveyed employees work overtime for an average of 28 hours to make ends meet.

    The survey concluded that an average worker’s minimum monthly spending is VND 6.5 million (US$ 280), while the average base salary is only around VND 4.6 million (US$ 197.8), which forces laborers to work overtime.

    In 2017, consumer prices increased by 3.53 percent, while in 2018, it increased by 3.54 percent. As there is a strong correlation between inflation and wages, the rise in inflation will impact wage growth.

    The 5.3 percent hike in 2019 minimum wages which is just slightly higher than the rise in consumer prices in 2018, will compel the government to increase the minimum wages by a much higher rate in 2020 to maintain the purchasing power.

    Note: This article was originally published in August 2018 and has been updated to reflect recent developments.