pwc.com.au

Global Employment Taxes Newsletter

December 2017

PwC

Introduction

Welcome to the second edition of the Global Employment Tax newsletter, bringing you updates on changes to the employment tax regimes in various countries across the PwC network as of to date. Key themes around the globe remain:

• The focus of the authorities on protecting employees in an increasingly mobile and contingent workforce, for example, by changing the labour force rules in Brazil, or increasing the retrenchment reporting responsibilities in Singapore;

• A greater focus on data, and creating tools to extract it, such as the introduction of Real Time Reporting in Ireland; and

• The introduction of large Tax Reform packages in Belgium, India and Korea.

In September this year, we held a regional webcast covering Australia, Hong Kong, Japan and Malaysia where we discussed about the current tax administrative environment as well as country specific recent developments, common pitfalls and opportunities among the employers. Playback of the webcast is available here.

At the end of this newsletter, we provide a 5-minute insight on overview of the relevant aspects of the GDPR and its impact on employment tax management.

We hope that you find the updates interesting and insightful. Please feel free to contact your local PwC colleagues, or any of our PwC colleagues listed in this newsletter, should you have any queries, or require further clarification on any of the issues raised in the newsletter.

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Name: Rohan Geddes, Global Employment Tax and Payroll Lead

E-mail: rohan.geddes@pwc.com

Name: Ken O'Brien, Global Employment Tax and Payroll Lead

E-mail: ken.obrien@ie.pwc.com

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EMEA

LATAM

NORAM

APAC

Content

EMEA 4

APAC 9

NORAM 13

LATAM 15

* 5-minute insight 16

PwC

EMEA

Ireland

Increase in employer contribution to National Training Fund levy

Announced in Budget 2018, the National Training Fund Levy will increase by 0.1% per annum over the next three years, bringing the Levy from 0.7% to 1%. As the Levy is a component part of the employer PRSI charge, this means that employer PRSI will increase by 0.1% per year for the next 3 years, going from 10.75% to 11.05% in 2020. This change will be included in the upcoming Social Welfare Bill.

Company cars and vans

A temporary BIK exemption is being introduced for employer provided electric vehicles (cars and vans) for next year only. Electrical charging points provided for use in the workplace for charging electric vehicles will also be exempt from a BIK charge, provided all employees and directors of the company can avail of the facility. These interim measures are intended to allow time for a comprehensive review of the taxation of employer provided vehicles, the results of which may mean further changes in next year’s Finance Bill.

PAYE — Real Time Reporting

Finance Bill 2017 sets out the main changes necessary to underpin the introduction of Real Time Reporting (RTR) on 1 January 2019.

One of these is a change to the basis of taxation under which PAYE will apply, from an earnings basis to a receipts (or a real time) basis. This will apply for emoluments paid on or after 1 January 2018. Transitional arrangements are included for emoluments which may have been taxed in 2017 (on an earnings basis) but are then received (and taxed) in 2018. This is a significant change, with potential relevance for PAYE taxpayers in receipt of bonuses which may be earned in one period but paid in another. There may also be implications for globally mobile employees, coming to or leaving Ireland.

At a practical level, RTR will look like this:

1. On or before payment of emoluments to employees, an employer will notify Revenue of:

• the amount of emoluments being paid

• the date of payments

• the income tax deductible.

2. Revenue may issue a statement summarising the total amount of income tax deducted.

3. A return will be made by the employer by the 15th day of the following month specifying the total income tax deducted (where the statement issues from Revenue, this will be deemed to be a return for this purpose).

4. Payment is due to the Collector General by the 24th of that month (where the employer pays and files via ROS).

Some points of particular interest, include the fact that:

• the due date where an employer pays and files online is the 24th of the following month (currently 23rd)

• the submission date for the small and irregular benefits return has been brought forward by 23 days (from 15 February to 23 January)

• in general, provisions allowing Revenue to estimate tax have been removed — going forward, Revenue will issue assessments, rather than estimates

• provisions are included outlining the obligations on an employer in the event of a persistent technology systems failure. No changes have been made to the penalty regime as it applies to RTR.

Finally, a new provision has been included for the recoupment, on a grossed-up basis, of income tax where PAYE is not operated by an employer. This has been a point of discussion in recent Revenue audit cases. It will apply from 1 January 2018.

Key Employee Engagement Programme (KEEP)

A new Key Employee Engagement Programme (KEEP) provides for advantageous tax treatment on share options for employees of SMEs from 1 January 2018 to 31 December 2023, subject to EU approval.

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PwC

EMEA (cont’d)

UK

Requirement to Correct

The draft Finance Bill 2017 introduced a legal obligation for anyone with offshore interests (employers and individuals) to correct any UK tax errors relating to these (a ‘Requirement to Correct’). This Requirement to Correct period was intended to run until September 2018.

Where a taxpayer fails to correct an error within this period, the new regime would impose a penalty of between 100% and 300% of the tax. The penalty would apply regardless of the reason for the error. The only defence to a penalty will be that the taxpayer has taken reasonable care.

National Minimum Wage (NMW) — Amnesty Opportunity

There has been a significant increase in NMW audit activity by HMRC over the past few months and employers have been receiving letters from HMRC advising them they will be subject to a NMW audit.

HMRC launched a new initiative, called “Assisted Self Correction” , which is expected to run for a short period. It provides an opportunity for employers to deal with historical risk with reduced costs and minimal reputational impact.

The technical nature of the Regulations mean that many employers have technical breaches, e.g. understanding what constitutes working hours, aligning the dates of payments with time worked, the operation of salary sacrifice, the provisions around deductions etc. These breaches incur penalties of up to 200% of the underpaid tax as well as naming and shaming by the Department for Business Energy and Industrial Strategy.

Germany

Insurance Cover for Teleworkers

Employees working from home are covered under their employer’s accident insurance policy as if they were carrying out employment duties in their employer’s premises.

This only applies for work activities which are performed in a specific room which is used for the teleworking activity. The employee is not insured within the private living area, e.g. Going to the kitchen in order to get some food or drinks.

The journey from home office to the company is covered by the accident insurance e.g. to attend a meeting,

Classification of students and interns according to insurance law in Germany

If students qualify for the working student privilege, only contributions to the statutory pension scheme are due.

In terms of the working student privilege, university education is not considered to be finished when a student completes their final examination, but rather in the month when they are informed in writing about their exam performance.

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EMEA (cont’d)

Hungary

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Tax exemption of employer provided housing assistance

From 1 January 2018, the amount of tax-exempt housing assistance provided by employers for labour mobility purposes will increase from 40% to 60% of the minimum wage in the first two years of employment. This means that in 2018, employers will be able to provide up to HUF 82,800 per month of tax-exempt housing assistance to employees who commute to work from a distance of more than 60 km.

Tax allowance for families with two children

From 1 January 2018, the tax allowance available to taxpayers with two children will increase: from HUF 15,000 to HUF 17,500 per child.

Changes to the definition of “own car”

From 1 January 2018, a favourable change that affects private individuals sent on business trips is that they will be eligible to receive reimbursement for using not only their own or their spouse’s car, but also a car registered to a close family member. For example, this means that private individuals using their parents’ car for a business trip will not be liable to pay company car tax.

Social tax/Healthcare tax

As of 1 January 2018 employer’s social (payroll) and healthcare tax rate will be reduced from 22% to 20%.

Minimum wage will be increased from HUF 127,500 to HUF 138,000, (guaranteed minimum wage for professional workers from HUF 161,000 to HUF 180,500) from 2017 to 2018.

Slovakia

Increase in subsistence amounts commencing 1 July 2017

Where an individual’s income is below the following monthly amounts they may apply for additional benefits.

• Subsistence amount for one adult person is EUR 199,48 (in the last period from 1 January till 30 June 2017 it was EUR 198,09);

• Subsistence amount for another jointly taxed adult person is EUR 139,16 per person (in the last period from 1 January till 30 June 2017 it was EUR 138,19);

• Subsistence level amount for a child is EUR 91,06 (in the last period from 1 January till 30 June 2017 it was EUR 90,42).

PwC

EMEA (cont’d)

Belgium

On 26 July 2017, the federal government announced an important tax, economic and social reform package. The reform would include lowering corporate tax, extension of wage withholding tax exemption for scientific research, introduction of a new tax effective profit participation premium, annual tax on securities accounts, withholding tax exemption for dividends, etc. (still to be drafted and enacted).

A draft law is currently at the Chamber to extend the current tax and social security exemption applicable to (e-) bikes to more powerful e-bikes, like the “speed pedelec” (maximum continuous power developed of 4000W and max speed of 45 km/h); still to be enacted.

The TSET (tax on stock exchange transactions) applies to stock transactions carried out via a foreign professional intermediary as of January 2017. From 2018, the rates will increase from 0,09% to 0,12% and from 0,27% to 0,35%. The tax authorities also confirmed (informally) that the TSET does not apply at the vesting of GSU, but TSET applies at the subsequent sale of the shares (even if carried outside Belgium).

Lithuania

Change to the treatment of Employee Relocation Expenses

Effective 1 July 2017, the reimbursement of employee relocation expenses by an employer are no longer seen as mandatory (i.e. the movement of household goods, travel and daily allowances for the days of actual travel while relocating). As such, the Lithuanian Tax Authorities comment that they should not be considered as non-taxable compensation. Previously, relocation expenses could be reimbursed tax free.

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Increase in social security contributions for Board Members

As of 1 January 2018, income paid to members of the Board or Supervisory Board will be liable to health insurance contributions of 3% for the company and 6% for the individual, so the total social security contributions will be 25.3% for the company and 9% for an individual.

PwC

EMEA (cont’d)

Russia

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Travel Expenses for the employees

Since 2017, per diems that exceed RUB 700 for internal business trips and RUB 2500 for foreign business trips are taxable and subject to medical, pension and social contributions.

Changes in the Immigration Registration Rules

On 19 July 2017 the Russian Constitution Court adopted the Resolution No. 22-P dated 18 July 2006 “On the Immigration Registration of Foreign Nationals and Stateless Persons in the Russian Federation” with the Russian Constitution at the request of nationals of the USA Mr Worden and Mr Oldham.

The court resolved that the mentioned provisions of the Federal Law do not comply with the Constitution in the meaning of imposing obligations on the foreign nationals to obtain immigration registration at the place where they are living provided that they are (a) temporary staying on the territory of Russia, (b) having the immigration registration at the address of the organization invited them and they are legally bounded with this organization (for instance, such organization could be their employer).

In practice, the Resolution of the Russian Constitution Court No. 22-P is trying to simplify the rules relating to immigration registration in Russia. Those foreign nationals and their family members who are registered at the address of the employer will have fewer difficulties with the immigration registration rules.

Enforcing the 3-days immigration registration requirement

This law imposes a 3-day immigration registration requirement in cases where there are changes to immigration data. This applies to all categories of foreign nationals, including the highly qualified specialists and their family members, nationals of countries that are members of EAEU, nationals of Ukraine and others.

This obligation was in place since 18 July 2006, but the immigration authorities did not prosecute for violations. In recent months, the authorities have started prosecuting for violations of this law.

PwC

APAC

Australia

Deduction for qualified commercial health insurance

Effective from July 1, 2017, payments made to qualified commercial health insurance plans (subject to a monthly cap of RMB200 and an annual cap of RMB2,400) can be tax deductible for China IIT purposes. As the China IIT withholding agent, the employing entity is obliged to reflect the eligible deductions and withhold the proper China IIT liability from the employees.

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Significant Global Entities (SGE) Penalty

The ATO has released a page of Frequently Asked Questions, click here to view, regarding administrative penalties for SGEs. It includes a consolidated list of approved forms that can be used as a starting point for understanding which lodgment obligations are subject to the new penalty regime. Please note, however, that this listing has not yet been finalised, and may include forms that are not within the scope of the penalty regime.

Audits on Employers’ Superannuation Guarantee Obligations

There continues to be increased ATO audit activity on employer’s superannuation guarantee (SG) obligations. We have seen the ATO issue information requests to employers to provide SG information for 20 sample employees, with failure to respond resulting in a full audit into the employer’s SG affairs. While the initial information request appears to be triggered by employee complaints to the ATO, we understand it is part of a wider ATO crackdown on SG compliance.

Single Touch Payroll

Single Touch Payroll is an initiative being introduced by the Australian Tax Office (ATO) to provide real time visibility over the accuracy and timeliness of organisations’ payroll processes. STP proposes to streamline the administration of employee payroll, tax and superannuation obligations for employers.

More information on STP can be found here.

China

Permanent Establishment (PE) risks created by overseas Business Travellers

The local tax authorities are working more closely with the State Administration of Taxation to expand the information channel for discovering PEs. Tax authorities are reviewing foreign exchange remittances paid by companies in the name of “service fees” in order to identify exposure arising from overseas companies sending business travellers to provide services in China.

If the overseas company is deemed to have created a PE in China, the business travellers working for the PE are considered costs borne by the PE. As a result, the travellers are not entitled to treaty relief, even though their actual physical stays in China were less than 183 days during a calendar year. A backlog of IIT and surcharges will be collected by the local tax bureau accordingly.

PwC

APAC (cont’d)

Hong Kong

Issues related to the Hong Kong-Mainland Double Tax Arrangement

The IRD clarified that the term “recognized stock exchange” does not include any stock exchange located in third jurisdictions. According to the mutual understanding between the tax authority in Mainland and Hong Kong, the recognized stock exchanges were Shanghai Stock Exchange, Shenzhen Stock Exchange and Stock Exchange of Hong Kong. The IRD also emphasised that the investment fund has to satisfy all the conditions prescribed in the paragraph in order to obtain the relevant tax relief in the Mainland. The amendment serves to clarify the tax treatments for investment funds in respect of the gains on sale and purchase of shares in Mainland and Hong Kong listed companies.

While the clarification is not legally binding, it serves as a good reference of the IRD’s stance on the share gains exemption application under HK/Mainland tax treaties.

Payment of Gratuity (Retirement Benefit)

The Union Cabinet has given its approval for the introduction of an amendment to the Payment of Gratuity Bill. The bill proposes to increase the gratuity limit from INR 1 Million to INR 2 Million. Once the bill is enacted, it is anticipated that the tax regulation will be amended in order to provide tax exemption up to INR 2 Million. It is proposed to be made effective retrospectively from January 1, 2016.

Goods and Service Tax (GST) Implementation

The Government of India kept up its promise of implementing GST throughout India as of July 1, 2017. While the first GST return was due by September 10, 2017, the GST Council extended the return filing deadline until October 10, 2017 for smaller businesses and to October 3, 2017 for the larger ones.

Introduction of Electronic Assessment

As part of the e-governance initiative, the tax department has launched an e-assessment facility. It is a simple way of communication between the tax department and the tax payer through electronic means without the necessity to visit the income tax office. However, the tax officer will have powers to call for additional documents and seek personal appearance at his discretion.

Indonesia

New Certificate of Domicile for foreign tax residents

On 19 June 2017, the DGT stipulated a new standard for the CoD for foreign tax residents. This will apply starting 1 August 2017 and add a new set of general residency tests that must be fulfilled by non-individual taxpayers to be able to enjoy tax treaty benefits.

Details can be found in this newsflash.

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India

PwC

APAC (cont’d)

Japan

Taxation of Gains made through Cryptocurrency transactions (Bitcoin)

In recent years, there has been cases where investors in Japan has received substantial profits through Cryptocurrency transactions. In light of this and in order to ensure proper treatment of such gains, the Japan National Tax Agency has recently announced that potential gains in the "transactions" of the "Bitcoins" is considered Miscellaneous Income for Japan tax purposes.

The “transaction” referred to above should be the gain associated with a purchase using Bitcoins. (For instance, if the Bitcoin was obtained for 100 and a product costing 300 was purchased using the Bitcoin, there is a 200 gain.) As Miscellaneous Income, the gains for the permanent resident taxpayer is subject to tax at the National graduated tax rates (and local tax), similar to employment income.

Since this has just been recently announced, more details should follow upon additional announcement from the National Tax Agency.

Korea

The Korean Ministry of Strategy and Finance announced the Korean government’s tax reform proposals on August 2, 2017, and the proposed reforms have now been modified and finalised by the government for submission to the National Assembly. If approved by the National Assembly, most of the proposed changes will take effect from January 2018 unless otherwise specified. The proposed reforms include the following employment tax or individual tax related topics:

• The top marginal individual income tax rate will increase from 44% to 46.4% (including local income tax), and the tax rate tobe applied for the second-highest income bracket of KRW 300~500 million will also increase from 41.8% to 44% (including local income tax).

• The reporting threshold for overseas financial accounts will be lowered to KRW 500 million from KRW 1 billion (Applies to Korean residents)

• There will be a potential change to Korean residency rules. Currently, if an individual is present in Korea for at least 183 days during the two consecutive years, he/she is regarded as a resident of Korea. Under the tax reform proposal, the threshold will change to at least 183 days during a year (not during the two consecutive years).

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PwC

APAC (cont’d)

Malaysia

Ruling in respect of GST borne by an Employer

Output tax borne by an employer in respect of any benefits-in-kind or perquisites are to be included as part of gross employment income of the employee, and is not tax deductible for the employer.

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Strategic Collaboration between Revenue and Immigration Authorities

Based on Malaysian Inland Revenue Board (IRB) Media Release dated 15 June 2017, the IRB will continue the strategic collaboration with Malaysian Immigration Department (MID) on the expatriates’ taxation matter. The HASIL My EXPAT which was supposed to be launched on 1 July 2017 has been postponed to September/October 2017. This system will further strengthen the collaboration of both authorities in exchanging information.

Singapore

Retrenchment of 5 or more Employees

With effect from 1 January 2017, if 5 or more employees are retrenched within a 6 months window, employers are required to notify Ministry of Manpower (MOM) by completing a Retrenchment Notification Form at MOM website within 5 working days after the employer's reached out to the affected employees regarding the retrenchment exercise.

The Notification Form is to be submitted via the MOM online notification system. Employers who fail to comply with this may be penalised.

Taiwan

Tax rate Adjustments in line with the Consumer Price Index (CPI)

According to the Taiwan income tax act, if the country’s CPI increases by at least 3% compared to the last CPI adjustments, the Taiwan Ministry of Finance (MOF) should make adjustments to the progressive tax rates and personal exemption amounts for Taiwan tax residents. As Taiwan has shown an increase of 3.06%, the personal exemption for tax year 2017 has increased from NT $85,000 to NT $88,000 and the progressive tax rate table has been adjusted accordingly.

Please follow this link to see the adjusted table.

PwC

NORAM

USA

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Mobile Workforce legislation passed by voice vote in the House

On June 20, 2017, US House of Representatives passed the Mobile Workforce State Simplification Act (HR 1393) by voice vote on the suspension calendar. The legislation simplifies withholding and reporting requirements by providing that no part of an employee’s wages or other remuneration are subject to income tax in state other than: (1) the state of the employee’s residence and (2) the state within which the employee is present and performing employment duties for more than 30 days during the calendar year.

New York Paid Family Leave is effective January 1, 2018

Effective January 1, 2018, employers will be required to provide “eligible” New York State employees with up to eight weeks of paid family leave per year. This will increase to 10 weeks, effective January 1, 2019, and to 12 weeks, effective January 1, 2021. An “eligible” employee is one who works for a covered employer for 26 or more consecutive weeks. Employees are eligible for paid family leave when caring for an infant, a family member with a serious health condition, or to relieve family pressures when someone is called to active military service.

Benefits will be phased-in beginning in 2018 at 50% of an employee’s average weekly wage, but not more than 50% of the statewide average weekly wage. Benefit amounts are fully implemented in 2021 when employees may receive benefits up to 67% of their average weekly wage, but no more than 67% percent of the statewide average weekly wage.

State of Washington Approves Mandatory Paid Sick Leave effective January 1, 2018

Washington voters approved a paid sick leave ballot initiative that goes into effect on Jan. 1, 2018. Employers are required to provide one hour of paid sick leave for every 40 hours worked. Unused accrued time carries over to the following year but employers may limit accrued time to 40 hours per year. Leave may be used by the employee for his or her own medical care and for the treatment of family members. Leave may also be used if the employee or family member is the victim of domestic violence, or if the employee’s work site, or the place of care or school for the employee’s child has been closed by order of a public official for a health-related reason.

Employers may require an employee to provide reasonable notice for an absence and to provide verification for use of paid sick leave with respect to absences that are over 3 days. Employers are not required to reimburse an employee for accrued and unused paid sick leave at the employee's termination.

PwC

NORAM (cont’d)

Canada

Important Changes to Employment Insurance Benefits

All of the proposed EI benefits and Canada LabourCode changes are expected to come into effect on the same day, later in the 2017-2018 fiscal year. The precise date is to be fixed by Order-in-Council.

The changes will apply across Canada, except for the changes to EI maternity and parental benefits which will not apply in Quebec.

The amendments will only affect workplaces covered under Part III of the Canada Labour Code, which applies to industries such as banking, telecommunications, broadcasting and inter-provincial and international transportation, including air, rail, maritime and trucking, federal Crown corporations and certain activities on First Nations reserves.

Below is a summary of the proposed changes to EI special benefits and leaves under the Canada LabourCode:

• Earlier access to EI maternity benefits and leaves: Presently, maternity benefits can be paid as early as 8 weeks before the expected date of birth. Through budget 2017, it would be as early as 12 weeks before the expected due date. However, the maximum duration of maternity benefits would remain at 15 weeks.

• EI parental benefits and leaves: Budget 2017 wants to allow parents to choose from the current 12 months or 18 months. They could choose to receive up to 35 weeks of EI parental benefits at a 55% of average weekly earnings (up to the maximum insurable earnings) or 61 weeks at a 33% rate, with the same limits.

• EI caregiver benefits and leaves: The new benefit would provide eligible caregivers up to 15 weeks of EI benefits while they take care of a critically ill or injured family member and up to 17 weeks of unpaid leave. The 35 weeks of EI benefits and 37 weeks of leave will continue to apply for the care of a critically ill child and will be expanded to any EI-eligible family member.

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LATAM

Chile

Bill to increase the current pension contributions

This bill seeks to reform the pension system by increasing current pension payments by up to 20%. A new 5% contribution funded by the employer will have two destinations: 3% will go to the worker’s inheritance — the balance of 2% will go to a collective savings insurance. This additional contribution will be — as indicated on the bill-managed by an entity other than the current administrators (AFP).

The bill also proposes an increase in the employment income cap on which pension contributions are calculated. With these changes, it is expected that current pensioners would see their payments rise by around 20%, while workers currently contributing into the system would see increases of up to 50%. The reform does not include an increase in the retirement age of men and women.

Brazil

Labor Reform — update

Further guidance around the labor reform which will become effective from November 2017 has become available. Some of the changes brought in by the reform include:

• Employment relationship — Employers are liable to pay a fine of BRL 3,000 where employees are not correctly registered. This fine applies for each unregistered employee.

• Working remotely — The new legislation recognises and addresses the new way of working available in many companies, where an employee works from a place other than his/her employer’s office. Where this is available to an employee, it will need to be in writing in the employment contract.

• Union contributions — Contributions to unions will only be made by companies and employees if a written consent is provided by them.

• Union agreements — Companies will be able to change certain policies, to become more flexible than what is set out in the legislation, if a union agreement in place.

• Termination of employment contract — A mutual agreement between the employer and employee to terminate an employment contract will be allowed, and as a result, the employee will be eligible for half of the rights he/she would have been entitled to had he/she gotten fired: Half of: one month of salary, if previously agreed, and 40% of the total employer contributions made into the employee’s indemnity fund. In addition, where a mutual agreement of termination of contract has been signed, the employee will be able to access 80% of the funds he/she has on the indemnity fund account, however the employee won’t have access to

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the Unemployment Program, which is otherwise made available by the Government.

• Outsourcing — An employee who has their employment contract terminated, will not be able to provide services to their former employer by way of outsourcing of services for a period of 18 months from the date when the employment was terminated.

As a result of the reform, companies will need to adapt and update policies and procedures in order to remain compliant with legislation.

PwC

5-minute insight

The General Data Protection Regulation vs. Employment tax

The GDPR: an introduction

The GDPR, which becomes effective on May 25th 2018, is the new European regulation which creates, controls and harmonizes uniform laws and regulations in Europe regarding the protection of personal data.

The GDPR applies to the data processing activities of companies that are data processors and controllers with an establishment in the European Union (hereafter: EU). Where a company has ‘an establishment’ in the EU, activities of that company that involve processing personal data will need to comply with the GDPR, regardless of whether the data is actually processed in the EU.

The GDPR also applies to data processors and controllers outside the EU where a company’s activities involve:

• offering goods or services to individuals in the EU (irrespective of whether a payment is required) or

• monitoring the behaviour of individuals in the EU, where that behaviour takes place in the EU.

MonitoringIn order to monitor and enforce the GDPR, each member state of the EU will appoint a regulatory body. The European Commission for data protection will then oversee all regulatory bodies of the member states.

RiskNon compliance to the GDPR will result in a fineof up to the greater of EUR 20 million or 4% of the annual global turnover. Besides this, not complying may have severe reputational risks.

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Employment tax and the GDPRAs a significant amount of personal data is involved with the processing of employment tax and corresponding data, to ensure compliance, it is essential that companies are aware of the GDPR in all employment tax processes.

Employment tax is regulated on a national level. Therefore the impact of the GDPR may differ per country. Notwithstanding, as a result of the GDPR, regular data processing activities need to be considered and strict control conditions may need to be applied to ensure breaches do not occur.

For example, it is possible that employment tax data is regularly shared with the tax authorities to be compliant for tax purposes. However, based on the GDPR, the sharing of this information could lead to a data breach.

Based on the foregoing, companies need to assess in every country whether employment tax laws and regulations are now contradictory to the GDPR rules. Again, although GDPR is a EU regulation, it may apply to companies globally.

Australia, as an exampleIn many countries, a privacy act is already in place and the GDPR has similarities with the privacy act that companies already have to apply. For example, in Australia, the Australia Privacy Act 1988 is in place.

The GDPR and the Australia Privacy Act 1988 share many common requirements, including to: • implement a privacy by design approach

to compliance • be able to demonstrate compliance with

privacy principles and obligations • adopt transparent information handling

practices.

There are, however, some notable differences, including the ‘right to be forgotten’, which does not have an equivalent right under the Australia Privacy Act 1988. As a result, Australian companies still need to determine whether they need to adapt their processes to comply with the GDPR.

PwC

5-minute insight

The General Data Protection Regulation vs. Employment tax

Actions to be takenThe actions organisations need to take to become GDPR ready with respect to employment tax in our view can be illustrated as follows:

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Analysing

Determine actions

Describing

Acting

In every country , it should be assessed which existing processes are affected by the GDPR?

Which actions are necessary to get existing processes and framework GDPR ready?

Describing the Conceptual, Readiness and Assurance effectiveness of the framework, taking into account different aspects of the organization, such as roles, responsibilities, knowledge sharing and communication.

Monitoring and testing of the new framework and processes will lead to continuous improvement.

PwC

Contacts

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EMEA

Name: Mark Geerse

E-mail: mark.geerse@pwc.com

Name: Ken O’Brien

E-mail: ken.obrien@ie.pwc.com

Name: Julian Sansum

E-mail: julian.a.sansum@pwc.com

Name: Ruth Punter

E-mail: ruth.punter@pwc.com

Name: Elmer Van Lienen

E-mail: elmer.van.lienen@pwc.com

Name: Aoife Reid

E-mail: aoife.reid@ie.pwc.com

Name: Karen Toora

E-mail: karen.toora@pwc.com

PwC

Contacts (cont’d)

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Name: Rohan Geddes

E-mail: Rohan.geddes@pwc.com

Name: Grace Huang

E-mail: grace.wj.huang@sg.pwc.com

APAC

Name: Rebecca Lai

E-mail: rebecca.lai@cn.pwc.com

Name: Tom Geppel

E-mail: tom.geppel@pwc.com

Name: Barry Knoetze

E-mail: b.knoetze@pwc.com

Name: Tina Schrob

E-mail: cristina.g.schrob@pwc.com

Name: Helena Fontenelle

E-mail: helena.f.fontenelle@pwc.com

Africa NORAM

NORAM LATAM

Name: Sakaya Johns Rani

E-mail: sakaya.johns.rani@sg.pwc.com