Setting Up and Managing Tax Processes

This chapter provides an overview of the Global Payroll for Thailand tax processes and discusses how to:

Click to jump to parent topicUnderstanding Global Payroll for Thailand Tax Calculation

Global Payroll for Thailand provides payroll rules and elements to support the following tax calculation features:

Click to jump to top of pageClick to jump to parent topicUnderstanding Tax Calculation Methods

When calculating personal income tax for declaration to the Revenue Department, there are two tax calculation methods to choose from: the Calculation In Advance Method (CAM) and the Accumulative Calculation Method (ACM).

CAM is the method that the Revenue Department recommends employees use. Most companies use ACM to calculate taxes, but governmental organizations still use CAM to calculate the taxes for their officers.

Global Payroll for Thailand enables organizations to choose either calculation method. Both ACM and CAM follow the same high level processing flow as shown in the following graphic:

Tax calculation process

The difference between the two tax calculation methods is in the detailed processing steps, such as annualizing regular taxable incomes, and de-annualizing the total calculated tax.

Tax Calculation Variables

Global Payroll for Thailand uses the following variables to control the tax calculation method:

You can override the default values for these variables at the pay entity, pay group, and payee levels.

Click to jump to top of pageClick to jump to parent topicUnderstanding Tax Calculation Types

PeopleSoft Enterprise Global Payroll for Thailand supports the following three tax calculation types:

Tax Calculation Types Logic

The following diagram describes the tax calculation logic of the three tax calculation types:

Tax calculation types logic

For each calculation type, a repeating loop function is used in the tax calculation:

In each tax loop, the system performs the following steps:

  1. Calculates the annual total income based on the income for the current period and the year-to-date income.

  2. Subtracts each tax allowance and obtains the total taxable income.

  3. Looks up the tax rate for the total taxable income in the tax rate table.

  4. Calculates the annual tax amount.

  5. Calculates the tax for the current period.

Determining Tax Calculation Type

The following diagram illustrates a typical organizational structure for Global Payroll for Thailand:

Typical organization framework setup for Global Payroll for Thailand

In the previous graphic, a pay entity is the business organization that pays payees.

Pay groups combine payees with the same frequency, same pay periods and same payment dates during a payroll process. You must define at least one pay group for each typical pay frequency used in your organization.

The pay groups described in the previous graphic are not delivered in PeopleSoft Global Payroll for Thailand. The example pay groups illustrate three different income streams:

TAX VR CAL METHOD is the element user key that specifies the tax calculation type, Withholding, Gross Up One Cycle, or Gross Up All Cycles.

PeopleSoft Global Payroll for Thailand delivers the following eligibility groups that specify which types of regular income a payee receives:

Global Payroll for Thailand delivers the following element groups:

Each of the delivered element groups in Global Payroll for Thailand belongs to the following eligibility groups:

Element Group

Eligibility 1

Eligibility 2

Eligibility 3

EG-401

Eligibility Group-KT401402

Eligibility Group-KT401

 

EG-402

Eligibility Group-KT401402

 

Eligibility Group-KT402

EG-Irregular

Eligibility Group-KT401402

Eligibility Group-KT401

Eligibility Group-KT402

EG-Common

Eligibility Group-KT401402

Eligibility Group-KT401

Eligibility Group-KT402

Determining Tax Calculation Types for Irregular Income

The tax calculation methods of irregular income are determined through positive input or element assignment while assigning values to irregular incomes.

The following diagram illustrates how to determine the tax calculation types and sequences for irregular income:

Determining the tax calculation types and sequences for irregular income

Although a single type of irregular income can use any of the three tax calculation types, Global Payroll for Thailand delivers one earnings element for each type of irregular income. Use the following steps to identify the tax calculation type for each type of irregular income:

  1. Add the TAX VR CAL METHOD variable to each irregular income earning element as a user key.

  2. Enter one of the tax calculation types in the TAX VR CAL METHOD variable through positive input or the Earning/Deduction Assignment page.

  3. Use the Configuration by Element page or the Configuration by Category page to ensure that the end user assigns a value to the TAX VR CAL METHOD variable.

  4. Add the TAX VR CAL METHOD variable as a user key for the related accumulators.

Since a payee can have all of the tax calculation types on irregular income during the same period, the pay group cannot be used to determine which tax calculation method should be used for a given irregular income. All earnings elements for irregular income use the TAX VR CAL METHOD user key to indicate which tax calculation type to use. Payroll administration needs to assign a value to this user key using supporting element overrides when entering irregular income using Positive Input or the Earning/Deduction assignment page.

See Configuring Element Overrides.

Click to jump to top of pageClick to jump to parent topicUnderstanding the Overall Flow of Tax Calculations

The following graphic describes the overall flow of tax calculations in Global Payroll for Thailand:

Overall Flow of Tax Calculation

The Global Payroll for Thailand process list has four sections for tax calculation:

  1. Regular Income Tax Calculation.

    This section calculates the personal income tax for regular income. Based on the current payee's type of regular income, this section chooses the tax calculation type to calculate the regular tax.

  2. First Irregular Income Tax Calculation.

    A payee can have three different types of irregular income within one payroll period: withholding, gross up all cycles and gross up one cycle. There are three separate sections to calculate different types of irregular incomes. Based on the configuration, this section can calculate withholding, gross up all cycles, and gross up one cycle irregular income taxes. If the organization specifies that this section calculates withholding tax, but the current payee does not have any withholding irregular income, then this section is skipped.

  3. Second Irregular Income Tax Calculation.

    You can specify the tax calculation type for this section.

  4. Third Irregular Income Tax Calculation.

    You can specify the tax calculation type for this section.

Click to jump to top of pageClick to jump to parent topicYear End Processing for Tax Recalculation

Tax calculations for Thailand are not completely accurate until the end of a tax year, since the calculations are based on the projection of annual regular income. So the tax amount must be adjusted at the end of tax year. For example, tax allowance declaration data can change within a tax year, so any tax calculation before the change in declaration data is inaccurate. In addition, changes to the calculation sequence for different types of irregular income result in different tax amounts.

Principles Used in Year-End Tax Recalculation

From an entire tax year perspective, the regular income tax amount does not need to be recalculated at the end of the year. However, the irregular income tax amount must be recalculated based on the final year to date regular income, including the final year to date original regular income and the year to date tax for regular income. The total irregular tax amount paid is the same as moving the year to date withholding income, the year-to-date original gross up all cycles irregular income, and the year to date original gross up one cycle irregular income to the last period of the year.

All irregular withholding taxes should be paid by the employee. So the year to date withholding irregular income can be used for the year end tax recalculation.

All irregular gross up all cycles taxes should be paid by the employer, and a corresponding amount of gross up all cycles irregular income is added to the employee's income. For example, during the 2007 tax year, the only gross up all cycles irregular income occurs in May. The amount of this income is 50,000 THB, and the calculated tax amount is 10,000 THB. Before the recalculation at the end of the year, the year to date gross up all cycles irregular income is 50,000+10,000=60,000 THB, but the year to date original gross up all cycles irregular income of 50,000 THB should be the amount used for the year end tax recalculation.

A part of the irregular gross up one cycle tax should be paid by the employer, and a corresponding amount of relative gross up one cycle irregular income is added to the employee's income. For example, during the 2007 tax year, the only gross up one cycle irregular income occurs in June. The amount of this income is 50,000 THB, and the calculated tax amount that employer should pay is 8,000 THB. Before the year end recalculation, the year to date gross up one cycle irregular income is 50,000+8,000=58,000 THB, but the year to date original gross up one cycle irregular income of 50,000 THB should be the amount used for the year end tax recalculation.

Calculation Logic In the Last Period of One Tax Year

The irregular tax calculation process in the last period of the tax year differs from the process during other periods of the year. For example, assume that the irregular tax calculation sequence is:

  1. Withholding.

  2. Gross up all cycles.

  3. Gross up one cycle.

The following diagram shows the process flow for calculating the withholding tax in the last period of the year:

Irregular withholding tax calculation in the last period of the year

Then, the gross up all cycles irregular tax is calculated based on the withholding tax results:

Irregular gross up all cycles tax calculation in the last period of the year

Finally, the gross up one cycle tax is calculated based on the result of the withholding and gross up all cycles tax.

Click to jump to top of pageClick to jump to parent topicTax Processing for Retroactive Processes

PeopleSoft Enterprise Global Payroll for Thailand supports retroactive processing of basic salary.

The amount of retroactive taxes is categorized as irregular earnings, whether the amount is positive or negative. The tax calculation type for the retroactive amount is the same as the retroactive element in the retroactive period.

If the negative retroactive tax amount plus any other irregular earnings with the same tax calculation type is negative, then the amount is not processed.

Click to jump to top of pageClick to jump to parent topicDelivered Elements for Tax Calculation

The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for Thailand.

See Viewing Delivered Elements.

Click to jump to parent topicMaintaining Tax Rate Tables

Thailand Personal Income Tax has two progressive tax rate tables: one for normal income and the second for termination income.

The following table lists the taxable income ranges and related tax rates in the Normal Income Tax Rate table:

Taxable Income Range

Tax Rate

0-150,000

0%

150,001-500,000

10%

500,001-1,000,000

20%

1,000,001-4,000,000

30%

4,000,001-999,999,999.99

37%

The following table lists the taxable income ranges and related tax rates in the Termination Income Tax Rate table:

Taxable Income Range

Tax Rate

0-100,000

5%

100,001-500,000

10%

500,001-1,000,000

20%

1,000,001-4,000,000

30%

4,000,001-999,999,999.99

37%

For example, assume that a person's annual taxable income is 520,000 THB. Based on the Normal Income Tax Rate table, the tax calculation would be:

0 + 35,000+ 4,000 = 39,000

Add the three tax amounts together to obtain an annual tax amount of 44,000 THB.

Global Payroll for Thailand adds two columns to the tax rate tables so that the system does not need to read the tables row by row in order to calculate the final tax amount.

The following table lists the Normal Income Tax Rate table with the additional information added by Global Payroll for Thailand:

Taxable Income Range

Tax Rate

Flat Amount

Base

0-150,000

0%

0

0

150,001-500,000

10%

0

150,000

500,001-1,000,000

20%

35,000

500,000

1,000,001-4,000,000

30%

135,000

1,000,000

4,000,001-999,999,999.99

37%

1,035,000

4,000,000

The following table lists the Termination Income Tax Rate table with the additional information added by Global Payroll for Thailand:

Taxable Income Range

Tax Rate

Flat Amount

Base

0-100,000

5%

0

0

100,001-500,000

10%

5,000

100,000

500,001-1,000,000

20%

45,000

500,000

1,000,001-4,000,000

30%

145,000

1,000,000

4,000,001-999,999,999.99

37%

1,045,000

4,000,000

The modified tax rate tables enable the equation for tax calculation to look like this:

Tax Amount = (Annual Taxable Income - Base) * Rate + Flat Amount

So, for the previous example with an annual taxable income of 520,000 THB, the tax calculation equation would be:

(520,000 - 500,000) * 20% + 35,000 = 39,000 THB

Calculating the Flat Amount for Normal Income

The values entered in the Flat Amount column of the modified Normal Income Tax Rate table are calculated with the following formula:

Multiply the numeric value of the tax income range for the previous row with the tax rate for the previous row and add any flat rate amount from the previous row.

Calculate the individual flat rate amounts in the table as follows:

Calculating the Flat Amount for Termination Income

The values entered in the Flat Amount column of the modified Termination Income Tax Rate table are calculated in the same manner as the modified Normal Income Tax Rate table. Calculate the individual flat rate amounts in the table as follows:

Click to jump to top of pageClick to jump to parent topicTax Rate Brackets

Global Payroll for Thailand delivers two brackets for tax rates:

  1. TAX BR PER RATE

    This is the bracket for the Normal Income Tax Rate table.

  2. TAX BR TER RATE

    This is the bracket for the Termination Income Tax Rate table.

Important! Do not modify the structure, or any property of these brackets. You should only maintain the data within the brackets if a tax rate change is introduced by the Thailand Revenue Department.

Click to jump to top of pageClick to jump to parent topicPages Used to Manage Brackets

Page Name

Definition Name

Navigation

Usage

Bracket Name

GP_PIN

Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Supporting Elements, Brackets, Bracket Name

Name the element and define its basic parameters.

Lookup Rules

GP_BRACKET1

Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Supporting Elements, Brackets, Lookup Rules

Define the lookup rules for a bracket.

Search Keys/Return Columns

GP_BRACKET2

Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Supporting Elements, Brackets, Search Keys/Return Columns

Identify the search keys and the return columns for the bracket.

Brackets - Data

GP_BRACKET3

Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Supporting Elements, Brackets, Data

Enter lookup values. The search key values and the return column values that you selected in the Brackets - Search Keys / Return Columns page appear here.

Click to jump to parent topicSetting Up Irregular Income Tax Calculations

Global Payroll for Thailand provides several formulas that enable you to determine the calculation order of the three types of irregular income: withholding, gross up one cycle, and gross up all cycles. The formulas are:

  1. TAX FM IR FACTOR1

    This formula enables you to specify which type of irregular income tax is calculated first by assigning different values to the TAX VR CAL METHOD variable. You must use specific abbreviations for each of the different types of irregular income, as follows:

    Adding your own if-else clauses into this formula enables multiple groups of employees to use different initial tax calculation types.

  2. TAX FM IR FACTOR2

    This formula enables you to specify which type of irregular income tax calculation type is calculated second.

  3. TAX FM IR FACTOR3

    This formula enables you to specify which type of irregular income tax calculation type is calculated last.

Warning! Incorrectly configuring these three formulas can cause errors in the calculation of irregular income taxes. For example, if all three formulas contain the code:'WH' >> TAX VR CAL METHOD, then the withholding irregular tax is calculated three times, while the other types of irregular taxes are not calculated at all.

If all employees in your company use the same calculation order, these three formulas can be very simple, each formula just has one line:'WH'/'GA'/'GO' >> TAX VR CAL METHOD.

If the irregular income tax type calculation order is different for each employee, then these formulas will be very complex.

For example, assume that your organization has several pay groups that require a different order for the three tax calculation types for irregular income. The following table describes the pay groups and the required order of tax calculations for each pay group:

Pay Group

First Tax Calculation Type

Second Tax Calculation Type

Third Tax Calculation Type

Pay Group A or 'PGA'

Gross Up All Cycles

Gross Up One Cycle

Withholding

Pay Group B or 'PGB'

Gross Up One Cycle

Withholding

Gross Up All Cycles

Pay Group C or 'PGC'

Withholding

Gross Up All Cycles

Gross Up One Cycle

All Other Pay Groups

Gross Up All Cycles

Withholding

Gross Up One Cycle

So employees in Pay Group A use the gross up all cycles tax calculation type first, while employees in Pay Group B use the gross up one cycle type first, and employees in Pay Group C use the withholding tax calculation type first.

In order to accommodate this combination of tax calculation sequences, modify the three calculation order formulas as shown in the following table:

Contents of TAX FM IR FACTOR1

Contents of TAX FM IR FACTOR2

Contents of TAX FM IR FACTOR3

'GA' >> TAX VR CAL METHOD If GP PAYGROOUP = 'PGB' Then 'GO' >> TAX VR CAL METHOD Exit Endif IF GP PAYGROUP = 'PGC' Then 'WH' >> TAX VR CAL METHOD Exit Endif

'WH' >> TAX VR CAL METHOD If GP PAYGROOUP = 'PGA' Then 'GO' >> TAX VR CAL METHOD Exit Endif IF GP PAYGROUP = 'PGC' Then 'GA' >> TAX VR CAL METHOD Exit Endif

'GO' >> TAX VR CAL METHOD If GP PAYGROOUP = 'PGA' Then 'WH' >> TAX VR CAL METHOD Exit Endif IF GP PAYGROUP = 'PGB' Then 'GA' >> TAX VR CAL METHOD Exit Endif

Click to jump to parent topicProcessing Overpaid Taxes

Changes in an employee's basic salary or tax allowances may cause the employee to pay more than the actual tax amount owed to the Revenue Department. The Thailand Revenue Department only returns overpaid tax at the end of the tax year. Global Payroll for Thailand enables you to track any overpaid taxes over the course of the tax year.

You can find the tax amount the employee has actually paid to the Revenue Department in the following accumulators:

You can find the tax amount the employee should pay to the Revenue Department in the following accumulators:

From the following deduction elements, you can find the payee's current period actual tax amount to be paid to the Revenue Department. These amounts are subtracted from the payee's net pay:

The following table provides a detailed explanation of the elements mentioned:

Element Type

Element Name(s)

Description

Deduction

TAX WH DED

The total Section 40(1) income withholding tax amount to be paid to the Revenue Department, including regular and irregular Section 40(1) income.

Deduction

TAX DD 402WH

The total Section 40(2) income withholding tax amount to be paid to the Revenue Department, including regular and irregular Section 40(2) income.

Deduction

TAX GA DED

The total Section 40(1) gross up all cycles tax amount to be paid to the Revenue Department, including regular and irregular Section 40(1) income.

Deduction

TAX DD 402GA

The total Section 40(2) gross up all cycles tax amount to be paid to the Revenue Department, including regular and irregular Section 40(2) income.

Deduction

TAX GO DED

The total Section 40(1) gross up one cycle tax amount that will be paid to Revenue Department, include regular and irregular Section 40(1) income.

Deduction

TAX DD 402GO

The total Section 40(2) gross up one cycle tax amount that will be paid to Revenue Department, include regular and irregular Section 40(2) income.

Deduction

TAX RIR RP SEG

TAX RIR RP MTD

TAX RIR RP YTD

The tax amount actually paid to the Revenue Department. You can retrieve the tax amount for a specified tax type, such as the withholding tax amount or the gross up all cycles tax amount.

Accumulator

TAX RIR RP TAL SEG

TAX RIR RP TAL MTD

TAX RIR RP TAL YTD

The total tax amount actually paid to the Revenue Department, including withholding, gross up all cycles, and gross up one cycle taxes.

Accumulator

TAX RIR SEG

TAX RIR PTD

TAX RIR MTD

TAX RIR YTD

The regular and irregular income tax amount for different tax types.

Accumulator

TAX IR SEG

TAX IR PTD

TAX IR MTD

TAX IR YTD

The irregular income tax amount for different tax types.

Accumulator

TAX IR TAL SEG

TAX IR TAL PTD

TAX IR TAL MTD

TAX IR TAL YTD

The total irregular income tax amount, including withholding, gross up all cycles, and gross up one cycle taxes.

Accumulator

TAX REG SEG

TAX REG PTD

TAX REG MTD

TAX REG YTD

The regular income tax amount for different tax types.

Accumulator

TAX REG TAL SEG

TAX REG TAL PTD

TAX REG TAL MTD

TAX REG TAL YTD

The total regular income tax amount, including withholding, gross up all cycles, and gross up one cycle taxes.

Accumulator

TAX REG EE SEG

TAX REG EE PTD

TAX REG EE MTD

TAX REG EE YTD

The Section 40(1) and 40(2) regular income employee tax.

Accumulator

TAX IR EE SEG

TAX IR EE PTD

TAX IR EE MTD

TAX IR EE YTD

The Section 40(1) and 40(2) irregular income employee tax.

Accumulator

TAX IR ALL SEG

TAX IR ALL PTD

TAX IR ALL MTD

TAX IR ALL YTD

The total Section 40(1) and 40(2) irregular income tax

Accumulator

TAX REG ALL SEG

TAX REG ALL PTD

TAX REG ALL MTD

TAX REG ALL YTD

The total Section 40(1) and 40(2) regular income tax amount, including withholding, gross up all cycles, and gross up one cycle taxes.

Click to jump to parent topicTracking Tax Calculation Issues

Global Payroll for Thailand provides tax log reports that you can use to track the detailed process of tax calculations for either the ACM or CAM tax calculation methods. During the payroll process, writable arrays store tax calculation related information so that you can generate tax log reports based on the information.

See Configuring Tax Log Reporting.

Click to jump to parent topicExtending Tax Calculations

This section discusses how to extend the tax calculation features of Global Payroll for Thailand.

Click to jump to top of pageClick to jump to parent topicAdding New Tax Calculation Allowances

Global Payroll for Thailand supports all of the tax allowances allowed by the Revenue Department available at the time of release. However, you may have to enter any new tax allowances that the Thailand Revenue Department announces after the release date.

Follow these steps to enter new tax calculation allowances:

  1. Add new fields on the Tax Allowance Declaration THA page (optional).

    Global Payroll for Thailand has two pages for tax allowance declaration: GPTH_TAX_ALLOW and GPTH_SS_TAX_ALLOW. This enables you to explicitly declare tax allowances.

  2. Modify the TAX AR ALLOWANCE array to retrieve information from the Tax Allowance Declaration Page (optional).

    The TAX AR ALLOWANCE array is used to retrieve tax allowance declaration data that is used by variables during the tax allowance calculation. If you create new fields for a tax allowance, you must create the corresponding supporting elements. Then, modify the TAX AR ALLOWANCE array to map any new fields to the new supporting elements.

  3. Create new tax allowance deduction elements.

    Create one deduction element for each new tax allowance, and add this tax allowance element into the TAX ALLOWANCE section.

    Specify the calculation logic of your new tax allowance that is based on the legal rule of the tax allowance. You may need use the following supporting elements:

  4. Add the current deduction element into the TAX AC ALLOW NM accumulator.

  5. Update the TAX VR TAXABLE AMT variable. Since this variable stores the current taxable income amount, you need to subtract the current tax allowance amount. You can create a post process formula to do this, such as the TAX FM ALL POST delivered by PeopleSoft.

  6. Add the new tax allowance into the TAX ALLOWANCE section. Pay close attention to the sequence number, since the Thailand Revenue Department specifies the detailed calculation sequence for each tax allowance. You need to add your new tax allowance to the correct position within the TAX ALLOWANCE section.

  7. Add the new tax allowance into the EG-COMMON element group.

  8. Update any related tax reports to include the new tax allowance.