Global Payroll Challenges - HLB USA of Global Payroll.pdf · Global Payroll Challenges December 13, ... ADP Global Compliance ... is autonomous from federal government which operates

Global Payroll Challenges

December 13, 2016 – HLB 2016 Executive Meeting

Orlando, Florida

Copyright © 2016 ADP, LLC. Proprietary and Confidential.

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• 25 Year Veteran with HCM Solutions

• Global HCM, Payroll and Time

• CPP and PHR Certifications

• MBA

• Background

• Service, Implementation, Management and Pre Sales

• Solution Architecture & Design

• Business Process Engineering

• Based in the Washington DC Metro Area

Wes Rihani – Global Solution Consultant


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ADP is a Star in the World’s Business Rankings

# 1 (5th time in 6 years)

# 51 # 276

# 370 10

Consecutive years


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Biggest Challenges Facing Companies

of executives expect to increase their number of employees abroad1

63% Sources: 1.ADP Global HCM Decision Makers

Survey 2015 2.ADP Research Institute 3.ADP Global HCM Decision Makers

Survey 2015 4.EY Global Payroll Survey, April 2013

of companies who thought they were compliant were fined in 20142

33% Mitigating Risk

average number of MNC Payroll Systems3

33 of companies still manage payroll administration at a local level4

65%

Globalization

Fragmentation Lack of

Expertise


5

The Evolution of Work - The Changing Nature of the Global Workplace – 2016


6

Focus on Compliance Thompson Reuters Top Compliance Trends 2016


Payroll in Latin America


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What makes payroll in Latin America so complex?

• The Latin American Region is a mixture of:

o emerging and booming economies,

o Varied political landscape,

o extreme contrasts in business

confidence and fortunes

• Latin America can never be categorized as

one homogenous whole

• But, there are common challenges and

opportunities


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Latin America Payroll Main Challenges

• Compliance requirements:

o Can be complex and difficult to interpret, with frequent

changes Brazil, complex tax structure subject to frequent changes as

governments respond to developing economy

o Detailed paper-based record keeping Colombia, forms for new starters physically have to be taken to the

authorities to be stamped and signed, and copies sent to payroll

Argentina, employers register all employment relationships in a payroll

book which is inspected periodically by the Ministry of Labor.

Mexico, employees must sign their payslips and organizations are

obliged to keep receipts for a minimum of five years as evidence that

payments have been made


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• Compliance requirements:

o Arduous payroll reporting requirements Mexico, CDFI file electronic versions of payslips in XML

format with the authorities

Mexico, social security contributions have to be calculated

twice, once in the payroll before month end, then again at

month end on the Social Security website and a

reconciliation between the two figures carried out

Brazil, the new reporting requirements of eSocial program

o Complex salary calculations Most countries pay a 13th month salary or bonus, and if an

employer fails to pay it, pays an incorrect amount, or is late

in paying, it is often considered a serious offence

o Changes are sometimes ambiguous and little

notice is given to implement them.


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• Many HR administrative requirements have an effect on

payroll:

o onboarding, separation processing, time and leave processing

and records management.

o requirement to sign payslips, complex rules around hiring and

firing in some countries. In Mexico, for example, some organizations choose to make

final/severance payments (“finiquito”) in front of a judge to avoid the risk

of future claims from departing employees


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• Frequent Pay Cycles: Wages are paid weekly, bi-weekly or

monthly - but different laws may mean running even additional

ones…

• Company-specific collective labor agreements (CLAs), need to

respond to changes sometimes at extremely short notice


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ADP Research Institute 2016

Number of Legislative Updates by Country

Americas

Country 2013 2014 2015 2016 up to May

Brazil 3 10 48 15

Canada 5 7 76 47

Mexico 1 76 52

United States 22 14 48 15

Total 30 32 248 129


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Mexico Legislative Compliance Updates

ADP Global Compliance Knowledge Base – Nov 2016

• Legislative update – Mexico – The SHCP Releases the Decree by which the Federation Revenue Act for Fiscal Year 2017 is issued; Effective: 01 January 2017 ( Tue Nov 15 2016)

• Legislative update – Mexico – The SAT Announces that the New Payslip Electronic Invoice Replaces the Annual Informative Declaration; Effective: 01 January 2017 (Fri Nov 11 2016)

• Legislative update – Mexico – IMSS Releases a Tool for Employers to Consult Completed Risk of Work of Employees (Information for ER); Effective: 08 November 2016 (Wed Nov 09 2016)

https://gckb.adp.com/What's_New?/Mexico/Legislative_update_%E2%80%93_Mexico_%E2%80%93_The_SHCP_Releases_the_Decree_by_which_the_Federation_Revenue_Act_for_Fiscal_Year_2017_is_issued;_Effective:_01_January_2017











https://gckb.adp.com/What's_New?/Mexico/Legislative_update_%E2%80%93_Mexico_%E2%80%93_The_SAT_Announces_that_the_New_Payslip_Electronic_Invoice_Replaces_the_Annual_Informative_Declaration;_Effective:_01_January_2017











https://gckb.adp.com/What's_New?/Mexico/Legislative_update_%E2%80%93_Mexico_%E2%80%93_IMSS_Releases_a_Tool_for_Employers_to_Consult_Completed_Risk_of_Work_of_Employees_(Information_for_ER);_Effective:_08_November_2016












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Canada Legislative Compliance Updates


• LEGISLATIVE UPDATE – CANADA – CANADA PENSION PLAN RATES FOR 2017 HAVE

BEEN ANNOUNCED; EFFECTIVE 01 JANUARY 2017 (NOV 11 2016)

• LEGISLATIVE UPDATE (HEADS UP) - CANADA – BILL PROPOSED TO ENHANCE THE CANADA PENSION PLAN (CPP); EFFECTIVE UNKNOWN (OCT 25 2016)

• LEGISLATIVE UPDATE (HEADS UP) - CANADA – NEW INCOME TAX FOLIO: BENEFITS

AND ALLOWANCES RECEIVED FROM EMPLOYMENT; EFFECTIVE 06 JULY 2016 (OCT 25 2016)

https://gckb.adp.com/What's_New?/Canada/Legislative_Update_%E2%80%93_Canada_%E2%80%93_Canada_Pension_Plan_Rates_for_2017_Have_Been_Announced;_Effective_01_January_2017










https://gckb.adp.com/What's_New?/Canada/Legislative_Update_(Heads_Up)_-_Canada_%E2%80%93_Bill_Proposed_to_Enhance_the_Canada_Pension_Plan_(CPP);_Effective_Unknown










https://gckb.adp.com/What's_New?/Canada/Legislative_Update_(Heads_Up)_-_Canada_%E2%80%93_New_Income_Tax_Folio:_Benefits_and_Allowances_Received_from_Employment;_Effective_06_July_2016











Reporting Requirements


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Mexico Reporting & Taxation Requirements


Social Security Mexican Social Security Institute (in Mexico IMSS) is autonomous from federal government which operates the Mexican Social Security benefits. The IMSS is responsible for several payments: retirement by age, invalidity or special retirement; sick leave; accident leave; maternity leaves, etc. • The main office is the IMSS and the sub delegations depend on the fiscal address of each company. • Once the updates are made (starters, leaves, modifications) they are registered in software provided by the IMSS that is called SUA which

determines the payment of each employee every month. • The report that support the IMSS payment is referred to as the .SUA file. The due date for the monthly declarations and payments is the 17th of

the following month referring to the payment. • Pensions are included in the Social Security Reporting • Health Insurance is also included in the Social Security Reporting

Tax Agency

• The federal office is the SAT; each clients administrative office will depend on the fiscal address. • The requested file for a client to make a declaration is generated by software provided by the SAT called DIMM that contains all of the

perceptions information and tax deductions for employee during a year. • Each employer must present a report of wages and withholdings to the SAT. Once the deduction is received and accepted by the SAT, a File

number is provided and the employer will use to generate and deliver the constancies of perceptions and deductions of each employee. • The due date to declare is before the 15 of February of the following year of the declarations

Payroll tax • The State Tax office is the Treasury offices. • The paying format might vary depending on each state within Mexican territory where the employer is located • The due date for declaration/payment varies depending on the income law of each Mexican state


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Mexico Reporting & Taxation Requirements Report Name Local Name

Category - Certificate, Declaration, Report, Registration

Type: Statutory / Non

Frequency Other Comments

Payslip Recibo de Nomina Certificate Statutory Per Cycle Emailed or Paper

Taxes Details: List of all taxes calculated REPORTE DE CALCULO DE IMPUESTOS Report Non Statutory Per Cycle Used to make payments to Social Security and tax authority

Payroll Report - List of employee wages and calculations REPORTE DE CALCULO DE NOMINA Report Statutory Per Cycle Hard copy required to be saved by the employer

Payroll Report - List of employee wages and calculations REPORTE DE CALCULO DE NOMINA Report Statutory Annual Hard copy required to be saved by the employer

SUA Payee Load Interface: reports that enables the client to make payments to SUA (Social Security)

Sistema Único de Autodeterminación - Cédula de Determinación de Cuotas Report Statutory Monthly Produced from the SUA

Statutory declaration SUA (Pagos al IMSS) Declaration Statutory Monthly Social Security Return- Monthly payment to the IMSS -

End of year comulative report REPORTE ANUAL POR CONEPTO Report Statutory Annual

Statutory declaration Determinacion del Impuesto Local sobre Nomina Declaration Statutory Monthly

Local Payroll tax - Monthly payment to the treasuries of the states

Statutory declaration Cálculo de riesgo de trabajo (IMSS) Declaration Statutory Annual Labor Risk Return- Calculation of risk of accidents to be reported to IMSS

Annual Declartion of Wanges Declaración anual de Sueldos y Salarios Declaration Statutory Annual

Annual declaration of Wages and Income Tax Witholdings - Provided by the Statutory Body

Profit Sharing Report Reparto de Utilidades (PTU) Report Statutory Annual

Profit share per employees- Lists per employee the total profit sharing they are entitled to

IMSS Confirmation Confirmaciones del IMSS Report Statutory By Occurance IMSS Confirmations received of Starters, Leavers and Changes of Salary

SAT Declaration Statutory Annual

Due Feb 15th, Clients must send the receipts of the payments to SAT for reconciliation.

SAT Declaration Statutory Annual Annual declaration certificates to employees



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Canada Reporting and Taxation Requirements

Social Security Not applicable in Canada

Pension Employers must track pension deductions remit premiums (employer and employee)

Tax Agency Clients must execute Canada Revenue Agency Business Consent Form and Ministry of Revenue for Quebec ; calculate payroll tax liabilities and make deposits to applicable agencies in accordance with the Electronic Tax Payment System, as applicable. They will prepare/submit all returns and reconciliation reports as required by the tax agencies within the jurisdictions applicable.

Health Insurance Employers must track employee health deductions remit premiums (employer and

employee);



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Canada Reporting and Taxation Requirements Category Form / Report Name Description of the Form Responsibility of Report

Preparation, fully by ER or EE or

both (e.g. EE requires to sign)?

Responsibility of Report Filing Filing Frequency Monthly /

Annually / Adhoc Who Files, ER or EE? To Whom, Gov or EE?

Taxation

Tax PD7A- Remittance Form

Statement of Account for Current

Source Deductions

Form used for employers to remit Canada Pension Plan (CPP)

contributions, employment insurance (EI) premiums, and income tax

deductions

ER ER Canada Revenue Agency

(CRA)

Depends on remitter type (e.g.

quarterly, monthly, twice

monthly, etc.)

Tax RC1- Request for a Business

Number (BN)

The first step in registering a company in Canada is applying for a Business

Number (BN), if required. The BN is a numbering system that streamlines

how businesses deal with the federal government for tax, statutory benefits,

and other matters.


(CRA)

Adhoc

Tax and Social

Security

RC1B- Business Number - Payroll

Account Information

Companies must register for a payroll program account if they:

• Pay salaries or wages;

• Pay tips or gratuities;

• Pay bonuses or vacation pay;

• Provide benefits or allowances to employees; or

• Need to report, deduct and remit amounts from other types of

remuneration (such as pension or superannuation).


(CRA)

Adhoc

Tax RC59- Business Consent A business owner, partner, director, trustee, or officer of a business can

authorize representatives, including employees, an accountant, a

bookkeeper, a lawyer, a payroll provider, or a firm, to act on the employer’s

behalf using this form.


(CRA)

Adhoc

Tax T2200- Declaration of Conditions

of Employment

If an employer reimburses or provides an allowance to employees to offset

the cost of tools that they need for their job or the employer pays for their

tools, the amount of the payment is a taxable benefit and should be

included in the employees' income.

ER The employee does not

have to file the form with

his or her income tax and

benefit return, but has to

keep it

N/A Adhoc

Tax T4- Statement of Remuneration

Paid

Annual Statement of Remuneration Paid- The T4 slip summarizes an

employee's remuneration paid and statutory deductions withheld for a

given taxation year.


(CRA) and a copy to the

EE

Annually

Tax T4A- Statement of Pension,

Retirement, Annuity, and Other

Income

Annual statement of pensions, lump-sum payments, annuities, or other

income


(CRA) and a copy to the

EE

Annually

Tax T4ASUM Summary of Pension,

Retirement Annuity, and other

income

Summary of T4A slips ER ER Canada Revenue Agency

(CRA)

Annually

Tax T4SUM- Summary of

Remuneration Paid

Summary of T4 slips ER ER Canada Revenue Agency

(CRA)

Annually

Tax TD1- Personal Tax Credits Return Federal Personal Tax Credits Return Form EE EE ER Adhoc

Tax TD1 by state - State Personal

Tax Credits Return

Individual State Personal Tax Credits Return Form EE EE ER Adhoc

Tax TD1X- Statement of Commission

Income and Expenses for Payroll

Tax Deductions

Employees who are paid commissions and who incur expenses that are

not reimbursed by the company may be entitled to personal tax deductions

when they complete their personal tax return each year.

EE EE ER Adhoc



ADP Global Payroll Solutions

Global Payroll Services, Legislative Support, Filing and Compliance


22

ADP is the World Leader in…

Payroll Business Process Outsourcing (BPO)

Gartner Payroll BPO Magic Quadrant 2016

Disclaimer: Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

ADP Strengths

• Client retention and satisfaction

• Strong global operations

• Platform flexibility

• Broad scope for HR BPO Services

• Strong investment and uptake of digital technology and innovation

• Continuous investments in HCM


23

A single global relationship

All with

one

Contract Service

Definition

Account

Manager Invoice

Pricing

Model

Working

Language:

English

Set of

Standard

Reports

Range of

corporate

services


24

ADP Streamline Coverage Map

■ Maldives

■ New Zealand

■ Pakistan

■ Papua New Guinea

■ Philippines

■ Samoa

■ Singapore

■ Sri Lanka

■ Taiwan

■ Thailand

■ Tonga ■ Vietnam

■ El Salvador

■ Guatemala

■ Honduras

■ Mexico

■ Nicaragua

■ Panama

■ Peru

■ Puerto Rico

■ Uruguay

■ USA

■ Venezuela

■ Mozambique

■ Netherlands ■ Nigeria

■ Norway

■ Oman

■ Poland

■ Portugal

■ Qatar

■ Romania

■ Russia

■ Saudi Arabia

■ Serbia

■ Slovakia

■ Slovenia

■ Jordan

■ Kazakhstan

■ Kenya

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■ Latvia

■ Lebanon

■ Liechtenstein

■ Lithuania

■ Luxembourg

■ Macedonia

■ Malta

■ Mauritius

■ Monaco

■ Morocco

■ Denmark

■ Egypt

■ Estonia

■ Finland

■ France

■ Germany

■ Ghana

■ Greece

■ Guernsey

■ Hungary

■ Ireland

■ Israel

■ Italy

■ Jersey

■ Argentina

■ Bahamas

■ Bermuda

■ Brazil

■ Canada

■ Cayman Islands

■ Chile

■ Colombia

■ Costa Rica

■ Dominican Rep.

■ Ecuador

■ Algeria

■ Angola

■ Austria

■ Azores

■ Azerbaijan

■ Bahrain

■ Belgium

■ Bosnia

■ Botswana

■ Bulgaria

■ Croatia

■ Cyprus

■ Czech Republic

■ Australia

■ Bangladesh

■ China

■ Fiji

■ Guam

■ Hong Kong

■ India

■ Indonesia

■ Japan

■ Korea

■ Macau

■ Malaysia

AMERICAS 21 1 EMEA 66 0 ASIA PACIFIC 24 0

112 Countries Live

■ South Africa

■ Spain

■ Sweden

■ Switzerland

■ Tanzania

■ Tunisia

■ Turkey

■ UAE

■ UK ■ Ukraine

■ Zambia


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Mexico

Argentina

Brazil

Chile

Peru

ADP Global Solutions in Latin America

Argentina

Brazil

Chile

Peru

Argentina

Bahamas

Bermuda

Brazil

Cayman Islands

Chile

Colombia

Costa Rica

Dominican Rep.

Ecuador

El Salvador

Guatemala

Honduras

Mexico

Nicaragua

Panama

Peru

Puerto Rico

Uruguay

Venezuela

Local

Solution Streamline

Solution

Mexico

Argentina

Brazil

GlobalView

Solution

ADP Offices


26

Streamline Clients in Latin America

Streamline Partnerships

+1200

Some of our Ambassador Clients…

+300

+300

+100

+100

+100

employees processed

+140 000


Documents

Global Payroll Challenges - HLB USA of Global Payroll.pdf · Global Payroll Challenges December 13, ... ADP Global Compliance ... is autonomous from federal government which operates