Employers must withhold income tax and social security contributions. Employers also must pay their share of social security contributions. These taxes are deductible by an employer for Argentine income tax purposes.
Employers must withhold federal income tax from wages paid to employees. Employers must also pay Fringe Benefits Tax and Payroll Tax where applicable.
Austrian wage tax is a withholding tax which has to be paid by the employer but is also partly borne by the employee. Along with this wage tax, the employer also has to pay social insurance contributions and other taxes. As a general, but very rough rule approximately 50 percent of the salary costs for an employee are taxes and social security contributions.
Employers must withhold federal income tax on the salaries paid to their employees. Employers must also pay social security contributions on such salaries. Such social security contributions are tax deductible in the hands of the employers.
Employers must withhold income tax and social security tax. Employers also must pay their share of social security tax, unemployment tax and other payroll charges in respect of compensation paid to employees. These social and payroll taxes are deductible by an employer for Brazilian corporate income tax purposes.
Employers must withhold federal income tax, Canada Pension Plan (CPP), or Quebec Pension Plan (QPP), contributions and Employment Insurance (EI) premiums from compensation paid to employees. Employers must also pay the employer’s portion of the CPP (or QPP) contribution and the employer’s portion of the EI premium in respect of compensation paid to employees. These contributions are generally deductible by an employer for Canadian income tax purposes. Other withholding obligations and taxes, such as employer health tax, may apply at the provincial level.
All employment income (eg, salaries, wages, allowances, bonuses, participations) are subject to payroll tax (Impuesto Único de Segunda Categoría). Said income is taxed according to a progressive scale ranging from exemption to 40 percent.
Employers shall withhold, file and pay this tax on behalf of the employee.
The stamp tax taxes documents or transactions involving a money lending operation (eg, loans, promissory notes, and any other document, even those dematerialized issued).
The stamp tax rates are:
- 0.066 percent of the document´s face value for every month or fraction of a month lapsed between its execution and maturity and may not exceed 0.8 percent.
- 0.332 percent of the document´s face value for the documents payable on demand or without a maturity date.
Non-payment of the stamp tax bans the execution of the debt before the Chilean Courts.
Employers must withhold Individual Income Tax when paying salaries and wages to employees. Mandatory social insurance and housing fund contributions are deductible for Individual Income Tax purposes.
Employees in Colombia must be enrolled in the social security system (for pension, health, and labor risks) and employers have the obligation to make the relevant monthly contributions.
If foreign employees are enrolled to a pension system abroad, they are not obligated to be enrolled or pay contributions to the Colombian pension system.
Employers in Colombia must make contributions to SENA, ICBF, and Family Compensation Fund, known as payroll taxes, that should be determined on the ordinary monthly salary earned by the employee, including any vacation. In the case of employees earning integral salary, the contribution will be determined on the 70 percent of the salary. Non-salary payments are excluded from payroll taxes. Payroll taxes do not have any cap.
For employees earning an ordinary salary lower than 10 MMLW (in 2022, COP10,000,000), employers are exempted for making contributions to SENA, ICBF and to the healthcare system.
Payroll taxes and social security charges correspond to the following percentage over the employee’s salary:
|Pension||16 percent||12 percent||4 percent|
|Health||12.5 percent||8.5 percent||4 percent|
|Solidarity Pension Fund2||1 percent - 2 percent||N/A||1 percent - 2 percent|
|Labour Risks||0.348 percent - 8.7 percent||0.348 percent - 8.7 percent||N/A|
|Payroll Taxes3||4 percent - 9 percent||4 percent - 9 percent||N/A|
1 The basis to calculate contributions to the social security system (pensions, solidarity pension fund, health and labor risks) is the ordinary monthly salary earned by the employee. However, if the monthly salary exceeds 25 times the minimum wage, contributions to the social security system will be calculated on the maximum basis of 25 times the minimum wage. Non-salary payments agreed between the employer and the employee are not included in the basis to calculate social security contributions, if such payments do not exceed 40 percent of the employees’ compensation. If these non-salary payments exceed 40 percent, the difference will be subject to social security contributions. In case of employees earning integral salary, 70 percent of salary will be the basis to calculate contributions to the social security system.
2 The contribution to the Solidarity Pension Fund only applies for employees who earn more than 4 times the legal minimum wage. This payment is equivalent to 1 percent of the monthly salary, but in the case of employees earning more than 16 times the minimum wage the rate will be increased as follows: between 16 and 17 times the minimum wage, an extra 0.2 percent; between 17 and 18 times the minimum wage an extra 0.4 percent; between 18 and 19 times the minimum wage an extra 0.6 percent; between 19 to 20 times the minimum wage an extra 0.8 percent and between 20 and 25 times the minimum wage an extra 1 percent. Contributions to the solidarity fund also have the cap of 25 times the minimum wage.
3 Contributions to SENA, ICBF, Family Compensation Fund (payroll taxes) shall be calculated based on the ordinary monthly salary earned by the employee, including any paid rest, such as vacation. In case of employees earning integral salary, 70 percent of salary will be the basis for this contribution. Non-salary payments are excluded from payroll taxes. Payroll taxes do not have any cap.
Finnish employers are liable to pay withholding obligations on salary paid to the Finnish employees. The tax base covers cash salary, benefits as valued by the tax administration and share-based employee benefits. The tax rate on salaries is progressive, up to approx. 57 percent.
In addition, Finnish employers are required to withhold the employee’s share of social security contributions from the salary payment. Moreover, Finnish employers are liable to pay their share of social security payments based on their paid total salaries.
Employees and employers must pay contributions for health insurance, unemployment insurance and the national pension scheme. These contributions are deducted at source from salary payments. Since 2019, income tax has had to be withheld at source by employing companies.
DAC 6 : Mandatory disclosure rules
On October 21, 2019, the French government published Ordinance No. 2019-1068 which transposes into French law the European Directive 2018/822 amending Council Directive 2011/16/EU regarding mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (commonly referred to as DAC 6).
DAC 6 requires intermediaries (or taxpayers, if there is no intermediary) to report to the competent tax authorities all cross-border arrangements that contain 1 or more hallmarks (indicating a potential risk of tax evasion), as referred to in new Article 1649 AH of the General Tax Code. Reported information will automatically be exchanged with all EU tax authorities through a central European register.
“Pillar II” Directive
Following the publication by the Organization for Economic Co-operation and Development (OECD) of the GloBE rules, on December 14, 2022, the European Union adopted a directive providing for the introduction of a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups within the EU.
This directive, which aims to ensure taxation at a minimum rate of 15 percent for profits made by multinational groups, must be implemented by the EU member countries by December 31, 2023 to be effective as of January 1, 2024.
Employers must withhold wage taxes (ie, withholding tax on income from employment) and 50 percent of the wage-related social security contributions for pension, health, nursing care and unemployment insurance.
Hong Kong, SAR
Regardless of whether the employees are residents in Hong Kong, employers are not required to withhold tax for employees. The only exception is in the case of a termination and if the employee intends to leave Hong Kong for over 1 month following the cessation of employment; in this case, the employer is required to give the IRD a notification in writing of such impending departure at least 1 month prior to the departure and must temporarily withhold all payment due to the employee for a period of 1 month from the date of filing the notification or until the IRD issues a “letter of release,” whichever is earlier.
Employers are required to:
- Withhold and pay 5 percent of their employees' relevant income (capped) as the employees' contributions and
- Pay an additional 5 percent as their own employer’s contributions (capped) to the Mandatory Provident Fund (MPF) scheme or a MPF-exempted Occupational Retirement (MPF Exempted) scheme.
Currently, the maximum mandatory contributions of each of the employers’ shares and employees’ shares for such MPF scheme or MPF Exempted scheme is HKD1,500 (approximately USD200) for employees with a monthly relevant income exceeding HKD30,000 (approximately USD3,870). If the employee's monthly relevant income falls under HKD7,100 (approximately USD915), their monthly contributions to MPF scheme or MPF Exempted scheme are not required, but the employer's contribution obligation remains the same.
Social security tax is paid by paying agents (eg, employers) based on a legal relationship with an individual (eg, employment). The rate of social security tax is 13 percent.
Generally, social security contribution is payable by the employees at the rate of 18.5 percent. However, employers (ie, paying agents) are obliged to withhold and pay the social security contributions for their employees.
Employers must withhold income tax at the applicable rates. Employers must also withhold and pay social security tax in respect of compensation paid to employees. These taxes are deductible by an employer for Indian income tax purposes. Professional taxes may be payable in some states of India.
Under the Pay As You Earn (PAYE) system, employers must deduct any income tax, PRSI (pay-related social insurance) and USC (universal social charge) each time a payment of wages, salary and other benefits in kind is made to an employee. Employers also make a contribution to PRSI.
Income tax is levied at 20 percent and a higher threshold of 40 percent applies to income over a certain threshold (which depends on the marital status of the employee). The Universal Social Charge applies to employees taxed under the PAYE system at a rate of 0.5 percent, 2 percent, 4.5 percent or 8 percent of gross income depending on the level of income earned. Self-employed persons earning over EUR100,000 may be subject to the Universal Social Charge at a rate of up to 11 percent.
Employers must withhold income tax from employees' salary, according to their individual tax rate, up to 50 percent (including Excess Tax of a 3 percent on high-income earnings).
Employers must also withhold national insurance and health care tax at the aggregate rate of up to 19.6 percent. The burden of such taxes is divided between the employer and the employee and is subject to a cap.
Employers must withhold an advance payment of individual income tax on salaries paid to employees. Employers also must pay social security contributions in respect of compensation paid to employees. These taxes are deductible by an employer for IRES and for IRAP but only if related to an open-ended working relationship.
An employer must withhold certain amounts on salary payments to employees. Under the withholding tax system, an employee does not pay the income tax directly to the tax authority. Instead, the employer is required to withhold a certain amount of money and pay that amount to the tax authority on behalf of the employee. Most Japanese employees do not file a tax return because their income tax has already been paid by withholding from their salary income. It is possible to get a tax refund by filing a tax return if the amount of income withheld exceeds the income tax that should have been imposed. The tax return made by employees is relatively rare because employers frequently adjust withholding tax in the later months of the year to account for their employees’ deductible expenses.
Social security contributions apply to wages and salaries and are due from both the employer (rates approximately 12 to 15 percent) and the employee (around 12 percent). Contributions for both employers and employees are computed on a capped basis and must be withheld by the employer. Self-employed individuals must register for social security purposes and pay approximately the same rates as the combined rates for an employer and an employee.
Employees must be registered with the Mexican Institute of Social Security (ie, Instituto Mexicano de Seguro Social, IMSS), as well as the National Housing Fund (ie, Fondo Nacional para la Vivienda de los Trabajadores, INFONAVIT).
This is relevant because Mexican employers are required to make contributions to the IMSS and INFONAVIT based on the salaries of their employees. These contributions are subject to daily salary caps that are determined based on a multiple of the minimum daily salary in the area in which the work is performed.
In this regard, an employee must pay approximately 2.755 percent of their salary to the IMSS (payment to the IMSS includes all social security dues), while an employer must pay a total of 36.69 percent of the employee's salary. Contributions to INFONAVIT are approximately 5 percent, and contributions to a Mandatory Pension Plan are progressive up to 4.241 percent of employee compensation for 2023, and increase at such rate until 2030, amounting to a maximum rate of 11.875 percent.
These contributions are subject to daily salary caps that are determined based on a multiple of the minimum daily salary in the area in which the work is performed.
The contribution percentages are generally applied to an employee’s total integrated salary. However, in some cases, the percentage is broken down and applied to only a portion of the salary. There are maximum contributions that are capped for high salaries.
In addition, most states impose a payroll tax of approximately 2 percent of a company's total payroll. There are no caps for the state payroll tax.
Mexican companies are required, under the Federal Constitution and labor laws, to make mandatory profit-sharing payments to employees equal to 10 percent of the adjusted taxable income of the company. In general terms, the same overall rules are applied in determining the adjusted taxable income for profit sharing as for income tax purposes. Most significantly, profit-sharing rules do not provide for inflationary adjustments or net operating loss carryforwards. Furthermore, exchange gains and losses are recognized as realized rather than an accrual basis. Mexican companies are not required to make profit-sharing payments for the 1st year of existence.
The profit sharing is allowed as a reduction for income tax purposes. The reduction of taxable income, once certain calculations are made, does not fall under deductible expenses. However, since profit sharing is not a tax per se, it is not creditable for foreign tax credit purposes, representing a cost to most foreign investors.
On April 23, 2021, amendments to the Federal Labor Law (Ley federal del Trabajo), the Social Security Law (Ley del Seguro Social), the Employee Housing Fund Law (Ley del Instituto del Fondo Nacional de la Vivienda para los Trabajadores), the Mexican Tax Code (Código Fiscal de la Federación), the MITL and the VAT Law in order to regulate outsourcing was published in the Federal Official Gazette, which came into effect of April 24, 2021.
It prohibits the subcontracting of personnel (ie, outsourcing), which is defined as an arrangement in which an individual or entity provides or makes its own employees available for the benefit of another.
Subcontracting of personnel for rendering specialized services or to execute specialized works that are not part of the main corporate purpose (ie, core business) or main economic activity of the beneficiary of the services or works (ie, the customer) is permitted, provided that the provider entity is duly registered as provider of specialized services or works with the STPS.
Although the Federal Labor Law establishes penalties in case of breach of the abovementioned provisions, in accordance with the amendments to the Mexican Tax Code, the invoices derived from the outsourcing of services in order to carry out activities forming part of the main corporate purpose or economic activities of the beneficiary will not be deductible for income tax purposes and not creditable for VAT purposes by the customers of such services.
Employer must withhold the personal income tax (IRPS) of its employees and deliver it to the tax authority by the 20th day of the following month. The annual tax rates are established on a steeply graduated basis depending on the amount of the income with the maximum rate being 32 percent.
Employer also must pay the mandatory social security contribution of 7 percent of the employee’s salary, 4 percent borne by the employer and 3 percent deducted from the employee’s salary, to the National Institute of Social Security (INSS).
Employers must withhold wage taxes and contributions for pension, health and unemployment insurance.
Under certain conditions, employers may provide incoming employees 30 percent of their wage tax-free. Incoming employees must be recruited or seconded from another country to work in the Netherlands and have specific expertise with no or little availability in the Dutch employment market. As of January 1, 2019, the 30 percent tax-free wage is only applicable for 5 years.
Employers are obliged to pay employer's contributions of the total salary. The rate is differentiated regionally and ranges between 0 percent and 14.1 percent. For 2023, the employer’s contribution amounts to 19.1 percent for employee salaries exceeding NOK750,000 per year.
Employers are further obliged to make tax deductions from the salary payments made to the employees.
Income produced by independent professionals is subject to a progressive tax rate:
|For the first 7 tax units:||0|
|Up to 5 tax units:||8 percent|
|Greater than 5 UIT and up to 20 tax units:||14 percent|
|Greater than 20 UIT and up to 35 tax units:||17 percent|
|Greater than 35 UIT and up to 45 tax units:||20 percent|
|Greater than 45 tax units:||30 percent|
It must be noted that only the Individual Rate applied to high end of the income scale is higher than the Corporate Rate (29.5%).
1 Tax Unit (2023) = PEN 4,950 = USD 1,300
Employers must withhold personal income tax from the employees' gross remuneration. Employers also must pay social security contributions in respect of compensation paid to employees. These taxes are deductible by an employer for corporate income tax purposes.
Employers must withhold income tax and social security contributions.
Employers must withhold income tax, social security contributions (pension contributions) and health fund contributions from the gross salary received by each employee. Salary tax incentives are applicable for the IT and R&D sectors.
Employers also must pay a labor insurance contribution on top of the gross salary costs and an additional pension fund contribution for employees working in hard and special conditions, which are deductible for Romanian corporate income tax purposes at the level of the employer.
Employers must withhold personal income tax from income earned by their employees and make mandatory social insurance contributions which are tax deductible expenses at the level of the paying entity.
An employer is required to file tax clearance for its foreign employees (i.e., non-Singapore citizens including Singapore Permanent Residents) who:
- cease employment
- start an overseas posting; or
- leave Singapore for more than 3 months.
In particular, the employer must file the relevant form at least 1 month before the last date of employment, or the departure date, to report the employee's taxable remuneration. The employer must also withhold all monies due to the employee once the employer knows the employee will cease Singapore-based employment. The employer will remit the monies withheld to the IRAS under the Directive to Pay which will be issued by the IRAS when the employee’s tax matters are finalized. Any balance will then be released to the employee.
Employers are required to deduct pay-as-you-earn (PAYE) on all remuneration paid to employees, including directors, unless a tax deduction directive is issued by SARS. Fringe benefits are included in remuneration.
In addition, employers may be required to deduct and pay unemployment insurance fund contributions and skills development levies.
Employers must withhold wage income tax. Employers also must pay 4 compulsory social insurances which are pension, health, unemployment and industrial accident in respect of compensation paid to employees. These taxes are deductible by an employer for corporate income tax purposes.
Employers must withhold income tax. Employers also must pay social security contributions. Social security contributions are deductible by the employer for Spanish income tax purposes.
Employers are obliged to pay employer’s contributions at a rate of 31.42 percent of the total salary. In addition, employers are obliged to make tax deductions from the salary payments made to the employees.
All B-permit holders and foreign employees with no residence in Switzerland are taxed at source, and the employers must withhold the income tax. All other individuals must fill in a tax return and are subject to tax on their worldwide income if they have their permanent or temporary residence in Switzerland.
An employer must withhold income tax from its payment of salaries to its employees. In addition, an employer is required to make partial payments of premiums for national health insurance for its employees, which include the regular premium plus a supplementary premium based on salaries and other payments to employees.
Employers are obliged to withhold income tax at progressive income tax rates on salaries. The applicable rate is applied between 15 percent to 40 percent.
The general rate for the employers' social security contribution is 20.5 percent, while the social security contribution rate applicable for the employees is 14 percent. Employers and employees are also subject to unemployment benefit plan contributions based on the gross salary. Applicable rates for such contribution are 2 percent for employers and 1 percent for employees.
Employers act as tax agents in relation to their employees and pay the following taxes:
- 18 percent of personal income tax is withheld from paid income
- 1.5 percent of military duty is withheld from paid income
- 22 percent of unified social contribution is paid on top of income at the cost of employer (subject to minimum and maximum caps)
United Arab Emirates
Social security is only applicable to UAE and other GCC nationals (ie, UAE and GCC passport holders).
End of service benefits
According to the UAE labor law, all employees who complete a period of continuous service that is longer than 1 year are entitled to a gratuity computed and accrued by employers according to either Emirate- or Free Zone-specific regulations.
Employers must withhold income tax (ie, pay as you earn or PAYE) and a social security tax (ie, primary national insurance contributions). Employers must also pay secondary national insurance contributions and may be required to pay an apprenticeship levy of 0.5 percent of the employer’s annual pay bill. Secondary contributions are deductible by an employer for UK corporation tax purposes, but it is not generally permitted to recover them from the employee.
Employers must withhold federal income tax. Employers also must pay social security tax, unemployment tax and Medicare tax in respect of compensation paid to employees. These taxes are deductible by an employer for US income tax purposes. Other withholding obligations and taxes may apply at the state or local level.
Employers are obliged to withhold employment tax from their employees’ income according to a tax table of graduated tax rates. The tax is known as Pay As You Earn (PAYE). The tax rate ranges from 0 percent to 40 percent depending on employment income earned by the individual.
In addition to PAYE, employers are also obliged to withhold an AIDS levy at the rate of 3 percent of the taxable income from their employees’ employment income.