Links Onboard – Latest APAC Tax, Payroll & Labour Law Updates
Below is the latest issue of Onboard, a quarterly update by Links. Our legislation update covers major tax, labour law, payroll and visa developments across Asia. It is designed to get you updated at-a-glance.
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- Hong Kong
- AEOI to be implemented for MPF schemes and ORSO registered schemes starting 2020
- Exemption Adjustment Made to Salaries Tax for People Over the Age of 65
- Increased Minimum Wage in Taiwan AEOI to be implemented for MPF schemes and ORSO registered schemes starting 2020
- Strengthened Deterrence Against Workplace Discrimination in Singapore
- Employers Requesting Applicants to Declare Mental Health is Now Discriminatory
- Raising Employee Compensation Limits for Medical Expenses
- Updated Minimum Salary for S Pass Eligibility
- Minimum Wage Increase in Main Cities of Malaysia
- 6% Tax Implementation on Foreign Digital Services like Airbnb & Netflix
- Progressive updates in the 2020 Budget
- Thailand Announcing Minimum Wage Increment
- An Average 5.7% Increase for Region-Based Minimum Wages for Non-State Employees in Vietnam
- Minimum Wage for Cambodia set at US$190 in 2020
- Six Days of Public Holidays Taken off in 2020
- Raising Respect for Myanmar Culture in the Workplace
- Indonesia to Increase Minimum Wage by 8.5%
- 10 Year Plan to Reduce Corporate Income Tax
- Plans to Standardise Salary in Philippines
- Overtime Cap at 45hrs to be Applied to Smaller Employers
- South Korea
- New Entitlements with Family Care Leave and Reduced Work Hours
- 2.9% Increase in South Korean Minimum Wage
- Companies Required to Comply with Amended Whistle-blowing Policy
- New Zealand
- Increasing Salary Threshold for Skilled Migrant (SMC) and Essential Skills Visas in New Zealand
- ANZSCO Skill Level Threshold Readjustment
AEOI to be implemented for MPF schemes and ORSO registered schemes starting 2020
Taking effect on the 1 January 2020, there will be an amendment of the taxation arrangement for the Automatic Exchange of Financial Account Information in Tax Matters (AEOI) relating to MPF schemes and ORSO registered schemes.
Under the amendment, MPF schemes and ORSO registered schemes will become reporting financial institutions (Reporting FIs) and will be required to comply with the due diligence and reporting obligations relating to the AEOI.
In accordance to the Amendment Ordinance, the MPFA reminds employers to take all practicable steps to ensure that their employees become members of an MPF scheme.
Exemption Adjustment Made to Salaries Tax for People Over the Age of 65
Exemption allowance for part-time and employees who are aged 65 or above or with permanent disability level of or above 60%, is adjusted to MOP$198,000.00.
The latest simulation calculation can be downloaded at: https://www.dsf.gov.mo/tax/tax_downloadapps.aspx
Increased Minimum Wage in Taiwan AEOI to be implemented for MPF schemes and ORSO registered schemes starting 2020
The increase minimum wage took effect on 1 January 2020. With the amendments, there will be a 3% rise from NT$23,100 to NT$23,800 in the monthly wage, and a 5% raise in the hourly minimum wage from NT$150 to NT$158.
The raise in minimum monthly wage is expected to benefit 1.36 million domestic workers while the minimum hourly wage is expected to benefit 500,000 workers.
Strengthened Deterrence Against Workplace Discrimination in Singapore
In January 2020, the Singapore Ministry of Manpower raised the administrative penalties across the board for all discrimination cases.
- Amendments increased the minimum length of suspension from 6 months to 12 months. More serious offenders may be liable to a debarment up to 24 months.
- Scope of suspension expanded to include work pass renewals and new work pass applications.
In the case of a 12 month suspension, one-third to half of the work passes cannot be renewed. As for more serious cases of discrimination with a 24 month suspension, up to all the work passes cannot be renewed, and the firm cannot hire new foreign workers.
Under the strengthened regulations, employers or key personnel who are found guilty of falsely declaring that they have considered all candidates fairly may be prosecuted. Employers convicted of false declaration may face imprisonment of up to 2 years, or fine up to $20,000, or both.
Employers Requesting Applicants to Declare Mental Health is Now Discriminatory
The TAFEP (Tripartite Alliance for Fair and Progressive Employment Practices recently updated its employment guidelines.
With the exception of job related requirements, employers should not ask job applicants to declare personal information such as their mental health condition.
Employers should check to remove all declarations on mental health condition from job application forms. Employers not abiding these guidelines may be deemed as discriminatory.
Raising Employee Compensation Limits for Medical Expenses
Starting 1 January 2020, there will be a 10% increase in the compensation limits for death and permanent incapacity for employees. There will also be a 25% raise in compensation limit for medical expenses, raising it from $36,000 to $45,000.
Updated Minimum Salary for S Pass Eligibility
The previous criteria for S pass was a minimum monthly salary of $2,300. Since 1 January 2020, this has been raised to $2,400. Only eligible candidates will be considered for an S Pass.
Minimum Wage Increase in Main Cities of Malaysia
As of January 2020, the minimum wage for workers in major cities of Malaysia has been raised to RM 1,200 per month.
6% Tax Implementation on Foreign Digital Services like Airbnb & Netflix
Starting 1 January 2020, a new 6% service tax was introduced to foreign digital services.
Certain rules will apply to the new digital service tax in Malaysia. For services valuing over RM 500,000 over 12 months, the foreign supplier will be required to register to collect and remit a Malaysia service tax of 6% on their sales to Malaysia-based customers.
Progressive updates in the 2020 Budget
In a recent budget issued by the Finance Minster of Malaysia, as part of their efforts to keep with the progressive labour market the Government will be reviewing the 1955 Employment Act, with focus on the following areas:
- Increase of maternity leave from 60 days to 90 days effective in 2021;
- Extend the eligibility to overtime from those earning less than RM 4,000;
- Improve the protection and procedures for handling sexual harassment complaints, and;
- Introduce new provisions on the prohibition of discrimination on religion, ethnicity, and gender.
Thailand Announcing Minimum Wage Increment
Announced by Thailand’s Ministry of Labour, the new minimum wage took effect on 1 January 2020.
The minimum wage rate (per day) ranges from 313- 336 Baht, and is applied depending on the province/ district.
An Average 5.7% Increase for Region-Based Minimum Wages for Non-State Employees in Vietnam
The regional minimum wage was updated as follows starting on the 1 January.
|Region 1||VND 4,420,000|
|Region 2||VND 3,920,000|
|Region 3||VND 3,430,000|
|Region 4||VND 3,070,000|
As a result, the capped salary for unemployment insurance will increase as follows.
|Region 1||VND 88,400,000 million|
|Region 2||VND 78,400,000 million|
|Region 3||VND 68,600,000 million|
|Region 4||VND 61,400,000 million|
Minimum Wage for Cambodia set at US$190 in 2020
For workings in Cambodia’s textiles and footwear manufacturing industry, minimum wage is mainly guaranteed.
With a 4.4% raise, the minimum wage will be increased from US$182 to US$190. According to the ministry, after factoring other benefits and overtime calculations, the average will amount from an average of $207 to $218 per month.
Six Days of Public Holidays Taken off in 2020
In response to business’ concern of too many public holidays, the Cambodian government issued a sub-decree reducing the total number of public holidays in 2020 from 28 to 22.
Aside from reducing the Royal Ploughing Ceremony to 1 day, reductions were made to the following days:
- International Women’s Day
- National Day of Remembrance
- International Children’s Day
- Anniversary of the Paris Peace Agreement
- Human Rights Day
Raising Respect for Myanmar Culture in the Workplace
A workplace handbook called “Respecting Myanmar Culture in the Workplace” was published earlier last year. This handbook was published by the Directorate of Investment and Company Administration (DICA) and the Myanmar Centre for Responsible Business (MCRB).
The publication covers day to day issues such as dress code and eating habits aimed to bring harmony into the workplace reflecting the overall desire to eliminate discrimination.
Indonesia to Increase Minimum Wage by 8.5%
In Indonesia, each local provincial government have a set minimum wage. October of 2019, the Minister of Labour issued an announcement mandating all provincial governors to increase their provinces’ minimum wage by 8.51%, taking effect on 1 January 2020.
Jakarta for example increased their minimum wage to RP4,276,349.906 per month. Foreign investors should seek help from local advisors to find out the minimum wage according to the province.
10 Year Plan to Reduce Corporate Income Tax
Plans to lower the corporate income tax will take place in 2020. The CIT reduction will be applicable to both resident and non-resident corporations, reducing the current 30% rate to 20%.
The reduction will be carried out in increments over the span of 10 years, reducing 1 percentage point each year to reach a corporate income tax rate of 20%.
Plans to Standardise Salary in Philippines
As part of the plans to standardise the salary in Philippines, starting in January 2020, there will be increases the take-home pay of government employees, including teachers and nurses.
Increasing every January in 4 tranches of government worker from 2020 to 2023.
Overtime Cap at 45hrs to be Applied to Smaller Employers
According to the new “Work Style Reform Legislation”, Japan now has an overtime cap of 45hours a month and 360 hours a year. The new amendment was rolled out to larger employers in April of 2019 and will apply to small employers starting in April 2020.
Highest penalty for people convicted is up to 6 months imprisonment and a fine of up to JPY300,000.
New Entitlements with Family Care Leave and Reduced Work Hours
Starting in 2020, the family care leave in South Korea will extend its scope including, “grandparents, parents, spouses, spouse’s parents, children, or grandchildren” and “except in case of direct parental descendants (grandchildren) other than the parents”.
Under the new amendment, family care leave can be established within 10 days per year.
In addition, employees may now request for reduction of working hours for reasons other than pregnancy and childcare.
Coming into effect in sequence, reduction can be used for family care, self-diseases and accidents, retirement preparations for anyone over 55 years old, and study.
|Effective date||Business size|
|1 January 2020||Businesses, workplaces or public institutions with 300 or more employees|
|1 January 2021||Businesses, workplaces or public institutions with 30- 299 employees|
|1 January 2022||Businesses, workplaces or public institutions with less than 30 employees|
2.9% Increase in South Korean Minimum Wage
The minimum wage of KRW 8,350 per hour in 2019 will be increased to KRW8,590 per hour in 2020. Factoring a 209 working hours every month, the minimum wage would come to 1.7 million won.
The new 2.9% increase in minimum wage took effect on January 1, 2020, applicable across all industries. This is the smallest rise since 2010 at 2.75%.
Companies Required to Comply with Amended Whistle-blowing Policy
From 1 January 2020, certain companies are required to have and make available to their employees and officers a compliant whistle-blowing policy. The requirement will apply to:
- Public companies
- Large proprietary companies (fulfilling at least 2 of the following)
- consolidated revenue for the financial year of the company and any entities it controls is $50m or above
- value of the consolidated gross assets at the end of the financial year of the company and any entities it controls is $25m or more, and
- the company, and any entities it controls, has 100 or more employees at the end of the financial year.
- Superannuation entities or trustees.
Increasing Salary Threshold for Skilled Migrant (SMC) and Essential Skills Visas in New Zealand
An update to the remuneration/ pay rate thresholds will take effect on the 24 February 2020 for the Skilled Migrant Category (SMC) Resident Visa and the Essential Skills Work Visa.
Increasing the threshold by 2%, the thresholds are based on the median salary and wage rate in New Zealand of NZD $25.50 per hour, or NZD $53,040 per year for a 40-hour per week job.
ANZSCO Skill Level Threshold Readjustment
Starting on 24 February 2020, there will be an update on the Australian and New Zealand Standard Industrial Classification (ANZSCO).
For more information on the specific threshold for the different levels of skill employment, please visit the New Zealand Ministry of Business, Innovation and Employment website.
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