In this section, fundamental concept and processing of monthly payroll accounting for non-resident employee are described
Overseas Salary Structure
The considerable differences exists in overseas salary structure which exist among companies, can not define what is the standard procedure for constructing overseas salary structure. In the present circumstances, you have to define overseas salary structure and its wage elements outside R/3 HR module based on information stored in the master data of R/3 HR and your company policy. And defined wage elements must be entered into relative infotypes of non-resident employees.
Extended overseas business trip :
In case of an extended overseas business trip, the basic payment and other allowances are not changed. However, payments effected from the time the employee acquired overseas residence status will be exempted from taxation.
Overseas Salary Calculation Function
The overseas salary used as the gross amount is retrieved from payroll related infotypes. As time management is not performed, evaluation of extra work hours is not carried out. In the gross calculation process, besides the total payment, the domestic and overseas portions of the payment also have to be calculated. This is necessary because after the net processing, these amounts are transferred to different bank accounts.
Net calculation is performed according to the legal regulation concerning overseas residence (details below).
Income Tax Regarding the Departure Date
(the employee has already overseas residence status at the payment day)
If either KIJUN-NAI nor KIJUN-GAI related work was entirely executed domestically (in other words, if the departure date is after the last day in which such work was performed), the payments are taxable. Thus payments relative to this period are subjected to domestic income tax calculation. Domestic income tax is calculated by applying a 20% tax rate to the domestic income.
If the departure day falls inside the payroll accounting period, part of work done in this payroll period may belongs domestic work and part of work may belong to overseas assignment. In this case, the payment for such payroll period can be processed as non taxable income. Thus the standard function takes this option.
(the employee still has internal residence status at the payment day)
If the employee has domestic residence status at the payment day, normal income tax calculation is performed, even if the employee leaves the country in this payroll period.
If residence status is changed from overseas residence to internal residence due to change of departure date, retroactive calculation must be performed. In the retroactive calculation for this period, income tax is recalculated based on the domestic residence status, and the difference between the recalculated amount and the amount previously paid is returned or collected accordingly.
If residence status changed from internal residence to overseas residence due to change of departure date, retroactive calculation must be performed. In the retroactive calculation for this period, tax is recalculated based on the overseas residence status, and the difference between the recalculated amount and the amount previously paid is returned or collected accordingly.
If there is any deduction amount defined in Infotype 0142 Residence tax, it is deducted in the correspondent month until end date of validity period.
Social insurance is calculated based on the portion of the overseas salary which is eligible for social insurance deduction (including SANTEI and GEPPEN).
If the labor insurance special option has been selected, this insurance fee is also calculated.
Life and Accident Insurance
If there is any deduction amount concerning life or accident insurance defined in Infotype 0143 Insurance deduction, the correspondent amount are retrieved and deducted.
Property Accumulation Savings
If there is any deduction amount defined in Infotype 0144 Property accumulation savings, the amount is retrieved and deducted.
Calculation of Difference Amounts
Social insurance and other types of deduction are, basically, deducted form the domestic portion of the salary. Amounts that cannot be deducted from the domestic portion of the salary are transferred as claims.
As in the normal payroll accounting, the domestic portion of the payment is proportionally transferred to the main bank and the second bank defined in Infotype 0009 Bank details.
Concerning the overseas portion of the payment, if there are entries defined in the new overseas bank subtypes, the correspondent amounts are proportionally transferred to the overseas main bank and the overseas second bank. If no entry exists, bank transfers are not carried out for overseas portion part.
If overseas portion part of the payment is not to be paid directory to non-resident employee, bank details information for overseas portion part should not be maintained with employee’s private bank account. In this case, maintain special bank account which belongs to the company for special purpose or not maintain at all.