Defining Earnings and Deductions

This chapter provides an overview of earnings and deductions in Thailand, and discusses:

• Regular earnings.

• Irregular earnings and deductions.

• Social security contributions.

• Provident fund contributions.

• Order of the court deductions.

• Other non-taxable earnings.

• Other taxable deductions.

• Other non-taxable deductions.

• Extending earnings and deductions.

Understanding Earnings and Deductions in Thailand

Global Payroll for Thailand supports several different types of earnings and deductions in order to meet common processing requirements.

See Also

Defining Earning and Deduction Elements

Viewing Delivered Elements

The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for Thailand. Instructions for running the query are provided in the PeopleSoft Enterprise Global Payroll PeopleBook.

See Viewing Delivered Elements.

Regular Earnings

Regular income is the amount paid to the employee during a sequence period. The assessable income, used for tax calculations, is estimated by projecting the regular income for the entire year.

Global Payroll for Thailand enables you to choose between the Calculation in Advance Method (CAM) for tax calculation and the Accumulative Calculation Method (ACM).

The system calculates the projected annual income when you use the CAM tax calculation by:

• Multiplying the monthly rate by 12.

• Multiplying the semi-monthly rate by 24.

• Multiplying the weekly rate by 52.

The system calculates the projected annual income when you use the ACM tax calculation by adding the year-to-date regular earnings income to the projected regular earnings income for the remaining calculation periods.

PeopleSoft Global Payroll for Thailand supports the following categories of assessable income, according to Section 40 of the Revenue Code in Thailand:

• Income under section 40(1).

  This is income derived from personal services rendered to employers, or employment income.

• Income under section 40(2).

  This is income derived by virtue of a post, office of employment, or service rendered. For example, fees, commissions, discounts, meeting allowances, gratuities, bonuses, and so on.

Global Payroll for Thailand delivers the following regular earnings elements:

• Basic Salary (SAL BAS EARN).

• Section 40(2) regular income (402 ER REG).

If you need to create new earnings elements for income under section 40(1), use the SAL BAS EARN earnings element as a template. If you need to create new earnings elements for income under section 40(2), then use the 402 ER REG earnings element as a template for your new elements.

Basic Salary

The basic salary earnings element, SAL BAS EARN, is a flat amount earnings element that is only paid at the earnings level. Basic salary is paid regularly for permanent employees, in the first period for new hires, and in the last period for terminated employees.

The calculation rule is an amount rate code supporting the KTBS01 element - the payee's monthly compensation rate.

SAL BAS EARN supports proration based on calendar day by proration element GP PRORATE CAL DAY whenever there is a partial period or when a pay rate change occurs during the pay period.

SAL BAS EARN supports forwarding retroactive processing, the delta amount is forwarded to another earnings element, SAL RTO DELTA; this earnings is treated as irregular income. The tax calculation method of the irregular income is the same as the tax calculation method for SAL BAS EARN in the period being processed retroactively.

Section 40(2) Regular Income

Section 40(2) regular income (402 ER REG) is an earnings element that is calculated in the same way as basic salary, or income under section 40(1). Only the tax category, such as 40(1) or 40(2), is reported in a different category.

If there is section 40(1) and section 40(2) income in the same period, the tax calculation is calculated sequentially, with section 40(1) income calculated first, and section 40(2) income calculated second.

The tax calculation sequence is:

1. Regular 40(1) income.

2. Regular 40(2) income.

3. Irregular 40(1) income.

4. Irregular 40(2) income.

Any step in this sequence can be skipped, if there is no income in that category for the current period.

Income under section 40(2) can have the following tax calculation methods:

• Withholding tax.

• Gross up one.

• Gross up all.

Note. During a single payroll period, both section 40(1) and section 40(2) regular income can be processed by a specific tax calculation method. However, you can use a different tax calculation method for subsequent payroll periods. For example, assume your payroll is processed every month, and in January all regular incomes are processed using the withholding tax calculation method. Then, in February, you can change the tax calculation for all regular incomes to the gross up all tax calculation method. You can handle this by overriding the TAX VR CAL METHOD variable on the Earnings - Supporting Elements Override page.

Irregular Earnings and Deductions

Irregular income is the payment of overtime, bonuses, or special payments in any period.

Global Payroll for Thailand delivers the following irregular earnings elements:

• Leave without Pay.

• Overtime.

• Bonus.

• Car Allowance.

• Meeting Allowance.

• Commission.

If you want to create additional irregular earnings elements, use the delivered elements as templates.

Leave without Pay

Global Payroll for Thailand provides two segment accumulators, SAL ABS PTD and SAL ABS NM, the ABS EAR earnings element, and the ABS DED deduction element for leave without pay.

The earnings element adds to the accumulator, while the deduction element subtracts from the accumulator. Implementers can add other earnings and deduction elements for leave without pay into the SAL ABS NM accumulator. All earnings and deduction elements for leave without pay should belong to one dedicated section of these accumulators, ABS INTEGRATE. In the beginning of this section, the SAL FM SET METHOD formula is called to set the correct tax calculation method.

ABS EAR and ABS DED act as integration elements to get absence input data from PeopleSoft Absence Management. The following template elements are delivered with Global Payroll for Thailand:

• Absence Entitlement Element (SCK ENT).

• Absence Take Type (SCK).

• Absence Take Element (SCK TAKE).

• Supporting Elements (SCK BR ENT, SCK FM ENT, SCK FM DAYCNT).

• Section (KTSE INIT, KTSE ABS TAKE).

• Process List (THABSENCE).

• Run Type (KTABSENCE).

Overtime

Overtime is considered as irregular income in payroll calculations, according to labor laws in Thailand. Overtime is defined as an earnings and calculated at an hourly rate in payroll.

To describe the overtime rates in Global Payroll for Thailand, assume that Employee A works a normal schedule of 9:00 a.m. to 5:00 p.m. Monday through Friday and does not work on Saturday or Sunday. Employee B normally works from 9:00 a.m. to 5:00 p.m. Wednesday through Sunday and does not work on Monday or Tuesday. Both employees receive an hourly wage of 100 THB (baht) per hour.

The overtime rates in Global Payroll for Thailand are:

• 1.5 times the hourly rate.

  If an employee works outside of his or her normal work schedule, the employer pays an overtime hourly rate that is at least 1.5 times the employee's normal hourly rate, based on the actual hours worked.

  Using the employees described above, if either employee works from 7:00 p.m. to 9:00 p.m. on a Wednesday, the employee receives at least 1.5 times the normal hourly rate, or 150 THB per hour for the two hours worked.

• 2.0 times the hourly rate.

  If an employee is not normally scheduled to work on weekends, and works during standard working hours on a weekend, he or she will receive an overtime rate at least two times the employee's regular daily wage, for each weekend day he or she works, based on the actual hours worked.

  Using the example employees, if Employee A works on a Sunday from 9:00 a.m. to 11:00 a.m., he or she would receive at least 2.0 times the regular hourly wage, or 200 THB per hour. Employee B normally works on weekends and would receive his or her normal pay rate of 100 THB per hour.

• 3.0 times the hourly rate.

  If the employee works on a day during the weekend outside of the standard working hours, the employer pays an overtime rate of three times the hourly rate, based on the actual hours worked.

  In this case, if Employee A works from 7:00 p.m. to 9:00 p.m. on a Sunday, the employee will receive at least 3.0 times the normal hourly rate, or 300 THB per hour.

Global Payroll for Thailand delivers the OVT EARN earnings element for overtime. This earnings element has two user keys: TAX VR CAL METHOD and OVT VR CAL RATE.

The Calculation Rule is: Unit * Rate * Percentage

Unit represents the hours of overtime. The rate element, HOURLY RT, represents the overtime hourly rate. The percentage element, OVT VR CAL RATE, represents the hourly rate multiplier that employer pays to a payee for overtime, e.g. if an employer pays 2.0 times the hourly rate to a payee, then OVT VR CAL RATE is 200.

The OVT EARN earnings element gets its value through positive input or elements assignment.

The Tax Calculation Method and Overtime Salary Rate are entered in the Tax Setup for Overtime Element region on the Calendar ID Override Details page.

Bonus

Global Payroll for Thailand provides the BON EARN earnings element to calculate bonus as an irregular income under section 40(1) in Thailand.

Global Payroll for Thailand supports two process modes for bonuses: normal cycle and off cycle. Two user keys, TAX VR CAL METHOD and NON VR SS FLAG, indicate the tax calculation method and whether the bonus is contributed to social security, provident fund, or both.

The value of the bonus, the tax calculation method, and the contribution to social security and provident fund flag are all entered through positive input or the Elements Assignment page.

Car Allowance

Global Payroll for Thailand provides the ALL CAR ALLW earnings element to calculate car allowance as an irregular income under section 40(1) in Thailand.

Global Payroll for Thailand supports the three tax calculation methods for car allowances. The TAX VR CAL METHOD indicates the tax calculation method for car allowances.

The value and tax calculation method for a car allowance are entered through positive input or the Elements Assignment page.

Meeting Allowance

Global Payroll for Thailand provides the 402 ER MEET earnings element for meeting allowances as irregular income under section 40(2) in Thailand.

Global Payroll for Thailand supports the three tax calculation methods for meeting allowances. The TAX VR CAL METHOD indicates the tax calculation method for meeting allowances.

The value and tax calculation method for a meeting allowances are entered through positive input or the Elements Assignment page.

Commission

Global Payroll for Thailand provides the 402 ER COMSN earnings element for commissions as irregular income under section 40(2) in Thailand.

Global Payroll for Thailand supports the three tax calculation methods for commissions. The TAX VR CAL METHOD indicates the tax calculation method for commissions.

The value and tax calculation method for commissions are entered through positive input or the Elements Assignment page.

Social Security Contributions

The Social Security employee contribution deduction, SI EE CONTRI, and the employer contribution deduction, SI ER CONTRI, are calculated by multiplying the social security base amount, SI FM CAL BAS, with the corresponding contribution rates, SI VR EE RATE and SI VR ER RATE. The Social Security base amount comes from the SI BASE PTD period to date accumulator. Contribution rates are stored in a database record, and the array elements, SI AR INFOR and SI AR DT RATE, retrieve these rates from the database.

Global Payroll for Thailand enables you to process Social Security contributions in monthly, semi-monthly, or weekly payroll runs. The system calculates the Social Security contribution for weekly payroll runs using the calculation: MTD Social Security contribution amount + current week's Social Security contribution amount + projection of the Social Security contribution amount for the remaining weeks of the month.

Global Payroll for Thailand supports Social Security contribution amounts between 1,650 THB per month and 15,000 THB per month. If the actual contribution amount is more than the stated maximum contribution, then the system uses 15,000 THB as the Social Security contribution amount. If the actual contribution is less than 1,650 THB, the system uses 1,650 THB as the Social Security contribution amount.

Provident Fund Contributions

PeopleSoft Enterprise Global Payroll for Thailand delivers the PF BAS PTD accumulator to store provident fund contributions. Both the provident fund employee contribution (PF EE CONTRI) and employer contribution (PF ER CONTRI) are calculated by multiplying the provident fund base by the corresponding contribution rates (PF VR EE RATE and PF VR ER RATE) stored in the database. The provident fund base is calculated by the formula PF FM BAS.

Contribution rates are retrieved from the database by the PF AR INFOR array element.

Order of the Court Deductions

PeopleSoft Enterprise Global Payroll for Thailand provides the GEN NONTAX CD deduction element for an order of the court deduction. The value of GEN NONTAX CD is entered by positive input or elements assignment. This is a non-taxable, or after tax deduction, so it is subtracted directly from net income.

Other Non-Taxable Earnings

PeopleSoft Enterprise Global Payroll for Thailand provides the GEN NONTAX ER element for non-taxable earnings. The value of GEN NONTAX ER is entered by positive input or elements assignment.

This is a template element for non-taxable earnings. Implementers can add more non-taxable earnings elements following this template. Since these earnings are non-taxable, they are added directly to net income.

Other Taxable Deductions

PeopleSoft Enterprise Global Payroll for Thailand provides the GEN TAXABL D deduction element for miscellaneous taxable deductions. The value of GEN TAXABL D is entered by positive input or elements assignment.

This is a template for all other taxable deduction elements. Implementers can add more taxable deduction elements using this template. Since these deductions are taxable, you need to specify whether it should be deducted from withholding, gross up all, or gross up one irregular income.

Other Non-Taxable Deductions

PeopleSoft Enterprise Global Payroll for Thailand provides the GEN NONTAX DD deduction element for non-taxable deductions. The value of GEN NONTAX DD is entered by positive input or elements assignment.

This is a template element for non-taxable deductions. You can add more non-taxable deduction elements using this template. Since this type of deduction is non-taxable, it is deducted directly from net income.

Extending Earnings and Deductions

This section discusses how to:

• Create taxable earnings for tax calculation.

• Create non-taxable earnings for tax calculation.

• Create taxable deductions for tax calculation.

• Create non-taxable deductions for tax calculation.

• Add retro functionality for new earnings elements.

Pages Used to Extend Earnings and Deductions

Creating Taxable Earnings for Tax Calculation

Follow these steps to create taxable earnings:

1. Define the earnings name.

   Specify the earnings name, security level, and overrides.

2. Define the user fields.

   Specify the user fields for this earnings element.

3. Define the calculation rule.

   Specify the components that make up the calculation rule for the earnings.

4. Define the rounding/proration rule.

   Specify the rounding and proration rules for earnings elements.

5. Define accumulators.

   Select the accumulators to which this earnings element contributes.

6. Create supporting element overrides.

   Create supporting element overrides at the element definition level.

Defining an Earnings Name

Access the Earnings Name page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Earnings, Earnings Name).

Give your earnings element an appropriate name and description based on the naming conventions of your company.

Carefully define the override levels.

Do not select the Always Recalculate check box. Selecting this check box causes repeated recalculations of the earnings, making the calculated result inaccurate.

Give your earnings element an appropriate category.

Defining the User Field

Access the Earnings - User Fields for Element <element name> page (click the User Fields link on the Earnings Name page).

For all taxable earnings elements, you must add the variable TAX VR CAL METHOD in the User Field field.

Defining Calculation Rules

Access the Earnings - Calculation page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Earnings, Calculation).

Choose a calculation rule, then define each calculation component. The values for the Calculation Rule field are:

• Amount.

• Base * Percent.

• Unit * Rate.

• Unit * Rate * Percent.

Defining Rounding/Proration Rules

Global Payroll for Thailand does not deliver any rounding rules, use the core Global Payroll rounding rule to define rounding rules for your earnings element.

Defining Accumulators

Based on your requirements, you should consider adding your earnings element into the following accumulators:

All of the above accumulators have a suffix "NM," which means that PeopleSoft will not maintain those accumulators. PeopleSoft delivers these accumulators for customers to add their newly created elements. Please only use these "NM" accumulators, when you create new earnings elements. If you directly add elements into "PS Delivered/Maintained" accumulators, there may be a conflict between your modification and any new patches from PeopleSoft.

Supporting Element Overrides

Access the Earnings - Supporting Element Overrides page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Earnings, Supporting Element Overrides).

Global Payroll for Thailand uses the TAX VR CAL METHOD variable to determine the tax calculation method for individual taxable earnings elements, if your new element is only used under one tax calculation method, you can assign this tax method at the element definition level using the Supporting Element Overrides page.

There are three possible values for the TAX VR CAL METHOD variable:

• WH

  Global Payroll for Thailand uses the withholding tax calculation method for this earnings element.

• GA

  Global Payroll for Thailand uses the gross up all cycle tax calculation method for this earnings element.

• GO

  Global Payroll for Thailand uses the gross up one cycle tax calculation method for this earnings element.

Creating Non-Taxable Earnings for Tax Calculation

To create non-taxable earnings, use the same steps that you used to create taxable earnings, with the following exceptions:

• Do not add the TAX VR CAL METHOD variable to the User Field field on the Earnings - User Fields for Element <element name> page.

• Do not add any non-taxable earnings into these taxable income accumulators:

  • SAL RIR NM

  • SAL RIR TAL NM

  • SAL REG NM

  • SAL REG TAL NM

  • SAL IR NM

  • SAL IR TAL NM

When you create non-taxable earnings elements, you can use the GEN NONTAX E element delivered by Global Payroll for Thailand as a template.

Creating Taxable Deductions for Tax Calculation

Follow these steps to create taxable deductions:

1. Define the deduction name.

   Specify the earnings deduction, security level, and overrides.

2. Define user fields.

   Specify the user fields for this deduction element.

3. Define the calculation rule.

   Specify the components that make up the calculation rule for the deduction.

4. Define any rounding or proration rules.

   Specify the rounding and proration rules for deduction elements.

5. Define accumulators.

   Select the accumulators from which this element deducts.

6. Create supporting element overrides.

   Create supporting element overrides at the element definition level.

7. Define arrears.

   Define the method to store deductions when the system is not able to take from a current pay run because of insufficient net pay.

Defining a Deduction Name

Access the Deduction Name page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Deductions, Deduction Name).

Give your deduction element an appropriate name and description, based on the naming conventions of your company.

Carefully define the override levels.

Do not select the Always Recalculate check box. Selecting this check box causes repeated recalculations of the deduction, making the calculated result inaccurate.

Give your deduction element an appropriate category.

Defining the User Field

Access the Deductions - User Fields for Element <element name> page (click the User Fields link on the Deductions Name page).

For all taxable deduction elements, you must add the variable TAX VR CAL METHOD in the User Field field.

Defining Calculation Rules

Access the Deductions - Calculation page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Earnings, Calculation).

Choose a calculation rule, then define each calculation component. The values for the Calculation Rule field are:

• Amount.

• Base * Percent.

• Unit * Rate.

• Unit * Rate * Percent.

Defining Rounding/Proration Rules

Global Payroll for Thailand does not deliver any rounding rules, use the core Global Payroll rounding rule to define rounding rules for your deduction element.

Defining Accumulators

Based on your requirements, you should consider adding your deduction element into the following accumulators:

All of the above accumulators have a suffix "NM," which means that PeopleSoft will not maintain those accumulators. PeopleSoft delivers these accumulators for customers to add their newly created elements. Please only use these "NM" accumulators, when you create new earnings elements. If you directly add elements into "PS Delivered/Maintained" accumulators, there may be a conflict between your modification and any new patches from PeopleSoft.

Supporting Element Overrides

Access the Deductions - Supporting Element Overrides page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Deductions, Supporting Element Overrides).

Global Payroll for Thailand uses the TAX VR CAL METHOD variable to determine which type of taxable income the current taxable deduction element is subtracted from withholding, gross up all cycle, or gross up one cycle. If your new element is only used under one tax calculation method, you can assign this tax method at the element definition level using the Supporting Element Overrides page.

There are three possible values for the TAX VR CAL METHOD variable:

• WH

  Global Payroll for Thailand uses the withholding tax calculation method for this earnings element.

• GA

  Global Payroll for Thailand uses the gross up all cycle tax calculation method for this earnings element.

• GO

  Global Payroll for Thailand uses the gross up one cycle tax calculation method for this earnings element.

Limitations

Since taxable deductions are subtracted from irregular taxable earnings using the same tax calculation method, whenever you add a taxable deduction to a given employee using Positive Input, you need make sure that there is enough irregular taxable income to allow the deduction.

Creating Non-Taxable Deductions for Tax Calculation

To create non-taxable deductions, use the same steps that you used to create taxable deductions, with the following exceptions:

• Do not add the TAX VR CAL METHOD variable to the User Field field on the Deductions - User Fields for Element <element name> page.

• Do not add any non-taxable deductions into these taxable deduction accumulators:

  • SAL RIR NM.

  • SAL RIR TAL NM.

  • SAL REG NM.

  • SAL REG TAL NM.

  • SAL IR NM.

  • SAL IR TAL NM.

Adding Retro Functionality for New Earnings Elements

Global Payroll for Thailand uses a forwarding method for retroactive processing. The forwarding method calculates the differences between the original and recalculated pay runs. The differences between the new and old calculations are carried forward to the current calendar period as an adjustment to elements specified by the user and can be a positive or negative amount. The amount carried forward is considered irregular income for tax calculations. The system uses the same tax calculation method for the forwarded amount and retro processed regular income.

Global Payroll for Thailand delivers retro process functionality for two earnings elements:

• The SAL BAS EARN earnings element for basic salary income under section 40(1) in Thailand.

• The 402 ER RETRO earnings element for the retroactive delta of the regular income earnings element 402 ER REG.

If you want to add the retro process feature to an earnings, you need to perform some additional set up. For example, after a new rate code is added, you need to add the associated earnings elements for the new rate code.

If you want to add retro functionality for new earnings elements, you need to perform the following steps:

• Add retro processing earnings elements.

• Set up retro process overrides.

• Add earnings elements to the EG-Common element group.

• Add earnings elements to the TAXABLE EARNINGS section.

Adding Retro Processing Earnings Elements

In order to support retro processing, you need add a new earnings element to store the retro amount. Set up the new earnings element using the SAL RTO DELT element as an example.

Set Up Retro Process Overrides

Select the elements to be forwarded on the Retro Process Overrides page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Triggers, Retro Process Overrides, Retro Process Overrides).

Global Payroll does not assume that every element in a process list should be forwarded, even when the retro method is forwarding.

Adding Earnings Elements to the EG-Common Element Group

Add all retro processing forward to earnings elements to the EG-Common element group using the Element Group Members page.

Note. The EG-Common element group is marked as PS Delivered/Customer Modified, which means that customers can add members to this element group. When applying a new patch for Global Payroll for Thailand, the element group will not be overwritten.

Adding Earnings Elements to the TAXABLE EARNINGS Section

Add new earnings elements to the TAXABLE EARNINGS section using the Section Name page.

To add new earnings elements to the section, select the Customer Control Indicator check box on the Section Name page. Then, on the Section-Definition page, add the earnings elements to the Section Element List region of the TAXABLE EARNINGS element section under the SAL RTO DELT element.