Newsletter

 

Payroll and Compliance - The Quarterly Chronicle

 
 

ADP proudly introduces its first newsletter for ASEAN, with a focus on the Philippines, Indonesia and Singapore. This newsletter will provide you with expert insights into the latest legislative updates on payroll and income tax regulations. ADP will release this newsletter every quarter.

For this inaugural issue, we are including consolidated articles for two 2 quarters: Jan - Mar 2018 and Apr – Jun 2018. From the next quarter onwards, we will release quarterly news in the first week of the following quarter. Please subscribe to receive this ASEAN newsletter in your inbox every quarter.

 
 

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Singapore

 

Foreign Worker Levy (FWL) Unchanged

The Ministry of Manpower (MoM) has announced that the Foreign Worker Levy rates will remain unchanged for all sectors from 1 July 2018. The earlier-announced Foreign Worker Levy increases for marine shipyard and process sectors will be deferred for another year.

Please find below Foreign Worker Levy Schedule for more information:
Sector/Pass Types Tier Dependency Ratio Celling (DRC) Levy Rates(s) (R1/R2)
1 Jul 2017 1 Jul 2018 1 Jul 2019
S-Pass Basic Tier ≤ 10% 330 330 To be announced in 2019
Tier 2 (services)
Tier 2 (Others)
10-15%
10-20%
650 650
Construction WPH Basic Tier ≤ 87.5% 300/700 300/700 300/700
MYE-Waiver 600/950 600/950 600/950
Services WPH Basic Tier ≤ 10% 300/450 300/450 To be announced in 2019
Tier 2 10-25% 400/600 400/600
Tier 3 25-40% 600/800 600/800
Marine Shipyard WPH Basic Tier ≤ 77.8% 300/400 350/500
300/400
Process WPH Basic Tier ≤ 87.5% 300/450 300/500
300/450
MYE-Wavier 600/750 600/800
600/750
Manufacturing WPH Basic Tier ≤ 25% 250/370 250/370
Tier 2 25-50% 350/470 350/470
Tier 3 50-60% 550/650 550/650

 

 

To read further details please refer to the official document: http://www.singaporebudget.gov.sg/data/budget_2018/download/annexa1.pdf#page=3

 

 

 

Philippines

ADP on Data Privacy

Philippines: In 2012, the Data Privacy Act (“DPA”) was passed and resulted in the creation of the National Privacy Commission (“NPC”). The NPC is responsible for implementing, enforcing and monitoring compliance with the DPA and published the Implementation Rules and Regulations in 2016 (“IRRs”). Five key compliance requirements are: 1. Appoint Data Protection Officer (DPO); 2. Conduct Privacy Impact Assessment (PIA); 3. Create Privacy Management Program; 4. Implement Privacy and Data Protection measures; and 5. Exercise Breach Reporting Procedures.

ADP has appointed Adam Higgins as its DPO and registered ADP Vista HCMSM, its data processing system, with the NPC.

Amendment under Social Security System (SSS)

On 16 January 2018 the Social Security System (SSS) released Circular No. 2017-010 amending the process of collection and posting of contributions.

The department through this amendment has introduced a new system called e-Collection System or e-CS to collect and post the employees contribution as well as employers’ contribution towards Social Security System (SSS).

This new change is effective from January 2018 remittance onwards.

In line with the SSS implementation of the electronic collection System (e-CS) whereas all employers are required to register or enroll My.SSS in the SSS Portal, a new input file specification for the SSS contribution collections list is supposed to be followed. The guideline for the same is attached: https://www.sss.gov.ph/sss/amsbillv3/files/AMSCCLS_QUICKGUIDE.pdf

This new system implemented by SSS is for the real time posting of employer's payments and detailed accounts of employees as well. This is effective from 16 January 2018

Here are the SSS Circular released by SSS: Circular: https://www.sss.gov.ph/sss/appmanager/viewArticle.jsp?page=Cir2017_010

Minimum Wages Amendment

The Department of Labour and Employment of Region 1 issued Wage Order Number RB 1 - 19 covering the provinces of Ilocos Norte, Ilocos Sur, La Union and Pangasinan and Cities of Laoag, Batac, Vican, Candon, San Fernando, Urdaneta, Dagupan, San Carlos and Alaminos.

The Wage Order provides for an increase in the basic wage effective 25 January 2018.

Industry / Sector Asset Size Old Minimum Wage Rates Amount of Basic Wage Increase New Minimum Wage Rates
Non-Agriculture
Large & Commercial Fishing Above PHP 100 Million PHP 280 PHP 30 PHP 310
Medium PHP 15 Million to 100 Million PHP 265 PHP 20 PHP 285
Small PHP 3 Million to PHP 15 Million PHP 252 PHP 13 PHP 265
Micro Up to 3 Million PHP 243 PHP 13 PHP 265
Agriculture
Plantation No Limit PHP 252 PHP 13 PHP 265
Non-Plantation No Limit PHP 243 PHP 13 PHP 265


Please find government circular at this link: http://www.nwpc.dole.gov.ph/pages/rb-1/cmwr.html

Withholding Tax limits Changed

There was a proposal for tax slab changes at the Bicameral Conference which happened on December 1. The same details were signed by the President Republic Act 10963 on 29 December 2017.

The changes are as below:

Every employers beginning January 1, 2018, making compensation payments to their respective employees shall deduct and withhold from such compensation a tax determined in accordance with the revised withholding tax table as shown below.

DAILY
Compensation Level 685 and below 685 1096 2192 5497 21918
Minimum with-holding tax 0 20% over the CL 82.19 +25% over the CL 356.16 + 30% over CL 1342.47 + 32% over CL 6602.74 +35% over CL
WEEKLY
Compensation Level 4808 and below 4808 7692 15385 38462 153846
Minimum with-holding tax 0 20% over the CL 576.92 +25% over the CL 2500 + 30% over CL 9423.08 + 32% over CL 46346.15 +35% over CL
Semi-MONTHLY
Compensation Level 10417 and below 10417 16667 33333 83333 333333
Minimum with-holding tax 0 20% over the CL 1250 + 25% over the CL 5416.67 + 30% over CL 20416.67 + 32% over CL 100416.67 +35% over CL
MONTHLY
Compensation Level 20833 and below 20833 33333 66667 166667 666667
Minimum with-holding tax 0 20% over the CL 2500 +25% over the CL 10833.33 + 30% over CL 40833.33 + 32% over CL 200833.33 +35% over CL


Also from this year onwards, Section 35 is revoked and removed. This simply means the additional exemption allowed under tax regime based on the status of the individual like married, married with child clause have been removed.

In broader terms, Government of Philippines has revised the Withholding Tax rates for 2018.

The below changes are effective from 1 January 2018 to 31 December 2022.

S. No Annual Income Range (Effective From 2018 to 2022) Income Tax Rates
1 PHP 0 - 250000 0%
2 PHP 250000 – 400000 20% of income excess over PHP250000
3 PHP 400000 - 800000 25% of income excess over PHP400000 + PHP 30000
4 PHP 800000 - 2000000 30% of income excess over PHP800000 + PHP 130000
5 PHP 2000000 - 8000000 32% of income excess over PHP2000000 + PHP 490000
6 Above PHP 8000000 35% of income excess over PHP8000000 + PHP 2.41 million


To know more, please refer to the circular: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20105-2017.pdf

https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/rev%20WT.pdf

Amendment under the 13th Month Pay and Other Benefits

RA 10963 Section 9 was also amended. The total tax exemption limit for all officials and employees of public as well as private has now been increased to PHP 90,000 (earlier the limit was PHP 82,000)

Amendment under Fringe Benefits

There was an amendment made under section 10(A) on imposition of taxes. As per the new rules, a final tax of 35% (earlier the limit was 32%) is to be levied on total monetary value of the fringe benefits furnished or granted to the employee by the employer.

Note: The grossed up monetary value of fringe benefit shall be determined by dividing actual monetary value of fringe benefit by 65%.

The mentioned changes are effective from January 2018.

Revision under Premium Contribution of PhilHealth Scheme Rate Adjustment

PhilHealth Department has published a Circular No. 2017-0024 which provides the details of revision for adjustment in the premium contributions covering all employed members in the Formal Economy.

The new monthly premium contributions shall be at the rate of 2.75% computed straight based on the monthly basic salary, with a salary floor of PHP 10,000.00 and a ceiling of PHP 40,000.00, to be equally shared by the employees and their employer.

Please find the revised calculation details below:

Monthly Basic Salary 2.75% Monthly Premium Personal Share Employer Share
PHP 10,000.00 and below PHP 275.00 PHP 137.50 PHP 137.50
PHP 10,000.01 to P 39,999.99 PHP 275.02 to 1099.99 PHP 137.51 to 549.99 PHP 137.51 to 549.99
PHP 40,000.00 and above PHP 1,100.00 PHP 550.00 PHP 550.00


The above changes are effective from 1 January 2018.

Please find government link for the circular as: https://www.philhealth.gov.ph/circulars/2017/circ2017-0024.pdf

List of Authorized SSS Accredited Collecting and Paying Banks; Effective 1 March 2018

The Social Security Commission (SSC) approved the renewal of accreditation of 43 Cooperative / Rural Banks as collecting and paying agents of SSS from March 1, 2018 to October 31, 2018. Collection operations, however, will remain on hold until they are fully compliant to the requirements for RealTime Posting of Contributions through the use of Payment Reference Number.

The full list of authorized banks is at this link: https://www.sss.gov.ph/sss/DownloadContent?fileName=ci2018-009.pdf

Guidelines on Warrants of District, Levy and Garnishment; Effective 11 April 2018

According to Section 22 (b) of Republic Act No. 8282, otherwise known as the Social Security Act of 1997, the contributions payable under the SS Act in cases where an employer refuses, neglects, or fails to pay the same shall be collected by the Social Security System (SSS) in the same manner as taxes are made collectible.

These Guidelines shall cover all delinquent or non-compliant employers subject to compulsory SS coverage, who are under legal obligation to deduct and to remit both employee and employer shares of contributions' delinquency, penalties, including liability for damages, if any, against whom final assessment notices have been issued.

The SSS shall not be barred from determining, computing and collecting the true and correct contributions due to the SSS even after full payment, nor shall the employer be relieved of its liability under the SS Act.

Procedural Highlights includes:
  1. SSS Branch Office (BO)/Large Account Department (LAD) shall prepare and serve Letter of Authority (LOA) and Preliminary Assessment Notice (PAN). Non-compliance within 15 days by the delinquent employer shall be served a Final Assessment Notice (Before Seizure) by the BO/LAD.
  2. The Employer may protest or dispute the FAN within 15 days from receipt of the FAN in the following forms:
    1. Request for Reconsideration
    2. Request for Reconciliation
  3. Resolution of Protest
  4. Effect of Denial
  5. Warrants of District, Levy and/or Garnishment

The Employer within 15 days from receipt of the Notice of Resolution denying the Protest, may file a formal petition to the SSC (Social Security Commission).

Further details can be found at the official link: https://www.sss.gov.ph/sss/DownloadContent?fileName=ci2018-007.pdf

Extension of Deadline to Pay Contribution for Social Security System (Information for ER)

According to resolution No. 361-s.2018, the Social Security Commission revised the deadlines for the payment of contributions for the applicable months starting January to June 2018.

For employers, the existing deadline of 10th, 15th, 20th, 25th and month-end following the applicable month depending on the 10th digit of the 13-digit Employer Number has been moved to month-end following the applicable month.

The revised payment schedule was implemented in view of the system infrastructure adjustments brought about by the Real-Time Posting of Contributions (RTPC) program. Any penalties paid by employers based on the existing payment deadlines covering the applicable months of January to June 2018 shall be refunded.

Although this news is applicable for months starting January 2018, such was only uploaded in the website on 3 May 2018.

To read further details please refer to the official link: https://www.sss.gov.ph/sss/appmanager/viewArticle.jsp?page=NR2018_024

Home Development Mutual Fund (HDMF) Department Releases New Member's Data Form; Effective 16 April 2018

The Home Development Mutual Fund (HDMF) Department has released a new version (Version 5) of the Member’s Data Form (MDF) HQP-PFF-002 dated on 2 April 2018. This data form shall supersede the October 2015 Version 4. The Revised form still requires the same fields and instruction as the old one, except for the checklist of requirements for Partnerships/Corporation/Foreign-Owned Corporation which now requires Board Resolution related to authorized signatories in addition to the SEC Certificate of Partnership/Incorporation and Approved Articles of Partnership/Incorporation and Bye-Laws.

To read further details please refer to the official link: http://www.pagibigfund.gov.ph/DLForms/providentrelated/PFF002_EmployersDataForm_V05.pdf

Advisory on Authorized BIR Facilities for Electronic Tax and Payments; Effective 2 April 2018

The Bureau of Internal Revenue (BIR) advised all concerned taxpayer and BIR Personnel that the following e-services and portals/channels are the only authorized facilities for electronic tax filing and payment.

S. No Filing Facility e-Payment Gateway
1 eFPS - Tax filing and Payment Land Bank
2 e-BIRForms - Electronic Filing of BIR Returns Pay Tax Online or Globe GCash Mobile Payments


To read further details please refer to the official link: https://www.bir.gov.ph/

Amendments in De Minimis Benefits in Tax Reform for Acceleration and Inclusion (TRAIN); Effective 1 January 2018

With the implementation of the provision of Republic Act Number 10963 (Known as TRAIN), certain provisions on De Minimis Benefits were amended in line with Revenue Regulations 11-2018 as follows:

S.No Benefit Till 31 December 2017 From 1 January 2018
1 Medical cash allowance to dependents of employees, not exceeding PHP 1,500 per employee per semester (Earlier 750 per employee per semester) PHP 125 per month PHP 250 per month
2 Rice Subsidy PHP 1500 per month PHP 2000 or 50 Kg Rice per month
3 Uniform and Clothing Allowance PHP 5,000 per annum PHP 6000 per annum


To read further details please refer to the official link: https://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202018/RR%20No.%2011-2018/RR%20No.%2011-2018.pdf

Revised BIR Forms under TRAIN; Effective 1 January 2018

There were new forms released under TRAIN. Please refer to the link for all the new amendments and changes made in the forms BIR FORM 1603Q and BIR FORM 1603Q :

https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2018/RMC%20No%2027-2018.pdf

Penalties Computed in BIR Form Number 1603 of the Electronic Filing and Payment System (Information for ER); Effective 27 April 2018

Due to the recent ongoing updates in BIR’s eFPS, the existing old version of BIR Form No. 1603 (Quarterly Remittance Return of Final Income Taxes Withheld on Fringe Benefits Paid to Employees Other than Rank and File) loaded in the eFPS is computing penalties for late filing and/or payment up to 30 April 2018. The reason for this is that the deadline in the eFPS is still being updated.

BIR Form No. 1603 Old deadline Updated Deadline under the TRAIN Law
On or before the 10th day of the month following the calendar quarter in which the fringe benefits were granted. not later than the last day of the month following the close of the quarter during which withholding was made


Hence, Revenue Memorandum Circular 28-2018 was issued to advise taxpayers to disregard the penalties computed by the system and pay only the basic tax due, provided that the payment shall be made on or before the last day of the month. Any filing and/or payment beyond the deadline shall be subject to the applicable penalties imposed/computed by the eFPS from updated due date until actually paid.

To read further details please refer to the official link: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2018/RMC%20No%2028-2018.pdf
 

Indonesia

Income Tax Return filing Process Amendment

The Income Tax authority (Ministry of Finance) has issued a new regulation related to monthly income tax filing return (SPT Masa PPh 21 / 26) under PMK 9/PMK.03/2018, dated 23 January 2018. This regulation replaces the previous regulation No 243/PMK.03/2014.

The changes listed below are effective from 1 March 2018.

The changes are related to submission of monthly income tax filing return under Article 21/26 with the following:
  1. The taxpayer is required to submit the tax filing return Article 21 using specific channels (e-filing) (Article 8, Paragraph 6).
  2. The specific channels that are mentioned in the regulation (Article 8, Paragraph 2a) are included:
    • Directorate General of Taxation web-portal
    • Electronic (e-filing) third party provider web-portal
    • Digital voice channel is defined by the Director General of Taxation for certain Taxpayers
    • Data communication network that are specifically connected between the Directorate General of Taxes and the Taxpayer
    • Other channels are defined by the Director General of Taxes
  3. The monthly income tax filing return submission shall NOT apply in term of the income tax withheld in the corresponding month is NIL (Zero), with exemption the NIL (Zero) amount is due to Certificate of Domicile. (Article 10, Paragraph 2)
  4. Specifically in the month of December, the income tax filing return obligation is applied (remain in force) despite the amount is NIL (Zero) (Article 10, Paragraph 2a)
  5. The reporting using specific channels (e-filing) are effective for March 2018 period which due on 20 April 2018. (Article 26a)
In connection with this new regulation to report monthly income tax using E-Filling channel, Company who does not has E-FIN number, is required to register to the tax office to get E-FIN number.

Procedure to request E-FIN number by Employer
  1. Complete the E-FIN form
  2. Prepare letter of appointment from the company and affix with company stamp and/or print out with company letterhead
  3. Show the original Director's ID Card (KTP) and Tax ID Number (NPWP) and submit the copy of it
  4. Show the original Company NPWP and submit the copy of it
  5. Provide the email address
  6. Prepare the Power of Attorney (POA) if the Director could not come to tax office

To read further details please refer the official link: http://www.jdih.kemenkeu.go.id/fullText/2018/9~PMK.03~2018Per.pdf

Badan Penyelenggara Jaminan Sosial (BPJS) (Social Insurance Administration Organization) Pension Contribution Wage Ceiling Amended

BPJS Pension Contribution's Maximum Wage ceiling is increased from 7,703,500 IDR to 8,094,000 IDR per month. This change will impact both employee deduction and employer contribution in payroll.

This is applicable from 1 March 2018.

For example,

BPJS Salary / Wage BPJS Pension Contribution @ 1% by EE BPJS Pension Contribution @ 2% by ER Total BPJS Pension Contribution
Wage Ceiling @ 7,703,500 IDR till 28 February 2018 77,035 IDR 154,070 IDR 231,105 IDR
Wage Ceiling @ 8,094,000 IDR from 1 March 2018 80,940 IDR 161,880 IDR 242,820 IDR


To read more please refer to the official government link: http://www.bpjsketenagakerjaan.go.id/
 
 

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