Payroll Compliance

Many companies struggle to achieve fully compliant payroll reporting. This could be caused by missing documentation, limited internal resources, lack of external payroll provider’s cross border payroll reporting expertise, etc.

A review of the submitted payroll reporting, can be performed to identify gaps, ensure that the reporting is in line with the government’s requirements, as well as check that the total tax paid correct (not too high or too low). The review can be performed in one specific country or in multiple countries in one go.

Some examples of elements a health check may include:

• Taxability of pay items
• Control of reported salary codes
• Assessment of process for payroll handling
• Tax computation
• Social security computation
• Review the alignment of a compensation package
• Review alignment towards compensation package and employment contract, staff handbook, share schemes brochures and plan rules

By having Deloitte assist you with a health check of your payroll reporting, you will be provided a detailed report identifying gaps, and with advice on how to best manage and correct potential current and future issues.

Complete and accurate balance sheets are key elements to ensure timely and correct payroll handling for cross border situations. Late or incomplete balance sheets may often lead to incorrect payroll reporting that can impose penalties for the company, imply costly cleanup processes, as well as a potential negative impact on employee experience.

By performing a balance sheet review your company will be rigged to have a full overview of your global payroll reporting and tax and social security cost.

A balance sheet review will typically include the following items:

• Assess if all global pay items for an individual are captured in the balance sheet
• Review of the correctness of timing for the inclusion of pay items in the balance sheet
• Analysis of pay item taxability for home and host purposes
• Quality review of processes for data gathering
  

As tax authorities around the world continue to apply increased scrutiny on employment tax compliance, many employers are now investing ways to proactively enhance their compliance globally. In practice, however, switching from reactive to proactive risk management involves a number of challenges and where you with a holistic approach typically look to map issues related to compliance, roles, tax authority audits and legislative changes, payroll items, etc., in order for you to “health check” your company’s global employment tax positions.

Questions to ask:

• Who is overall responsible for payroll compliance?
• Has there been or is it expected any legal changes globally affecting current payroll handling?
• Did the company undergo any structural changes or add new groups of mobility lately?
• Did the company change its payroll reporting software recently?
• Are the company’s pay items the same across jurisdictions?
• Who makes the actual payout to the employee (company or a third-party provider)?
• Are there any cash payments that are made outside the payroll system in-home or host?
• How many instances last 12 months has the company been subject to audits, and what was the result of these?

Deloitte’s experienced Employment Tax team can guide you through this process, aiding your organization in reaching compliance globally in a cost-effective way.