Understanding payroll outsourcing in Thailand
Thailand is similar to many other countries around the World with regards to payroll. It is usually the role of the accounts clerk or accountant in a company to make sure that all information is collated and to ensure that the correct taxes and Social Security are paid. This can be a very laborious process which can also be very stressful for the person or people who are designated to doing payroll in Thailand. This is perhaps the main reason that an increasing number of companies are looking for payroll outsourcing solutions. It has been found that outsourcing payroll in Thailand can actually be very cost effective, freeing up more time for other jobs.
Regardless of their size, all companies will need to conduct some form of payroll in Thailand to meet all the legal requirements laid down in the law. Records must be kept with regards to Withholding Tax paid (PND 1) as well as producing a Withholding Tax Certificate (BIS 50). In addition, records of all Social Security payments (SPS 1-10) must also so be retained. This along with the fact that you need to have copies of everyone’s bank account details can lead to a mountain of paperwork and of course the complications relating to human error. It seems extremely logical for SME companies to outsource their payroll needs to a company that can offer a bespoke accounting program that can meet all of your company’s individual outsourcing requirements.
There are lots of areas that anyone running a company would need to understand about payroll in Thailand. Initially, and is perhaps something that is well known but Personal Income Tax (PIT) is a direct tax that is levied on an individual with progressive rates being charged. Obviously, the more you earn, the higher your rate of PIT will be. The rates and rules are too complicated to be discussed in this article but a general overview is covered here. As general rule of thumb, various deductions and tax rates are applicable, depending entirely on the source of the income. Indeed, it is common for employees may have income from another source and these needs to be taken into account when doing the final calculation with regards to the amount of tax that the individual needs to pay. Also, an employee’s personal status is also relevant – are they single or married, do they have children; all of this needs to be known when doing overall calculation. This again reinforces the argument for outsourcing payroll to a company with specialist knowledge, like the Sutlet Group, so you can get on with the core of your business.
Withholding Tax is slightly less complicated but still regarded as a grey area. Employment income is taxed at a rate of between 5 and 37%, so again perhaps creates more confusion. The need for these records and more importantly payments to be accurate, can lead to many man hours being lost when you do your payroll in-house.
The information provided is correct at the time of writing but is subject to change. It is always advisable to speak to an expert to get correct, up to date advice prior to commencing your business.