Payroll in APAC (Asia Pacific): A Handbook
APAC, or Asia Pacific, is the geographical region that encompasses countries in and around Asia and the western Pacific Ocean. With many exciting prospects presented from business hubs such as Hong Kong and Tokyo, many businesses continue to expand into the Asia Pacific region.
Integrating payroll into the Asia Pacific territory, otherwise known as APAC, is the next logical step to facilitate this. With many challenges to overcome, read on to discover everything you need to know about APAC payroll.
What is APAC?
The definition of APAC has come under some contention, with many different people classing different countries under its wide umbrella. It can be defined however, as countries that are located in and around the geographical region of Asia and the western Pacific Ocean.
This includes countries such as China, Japan, India, Malaysia, Hong Kong, and some may class Australia and the Russia Federation to be within this category. You can see the full list of APAC countries here.
What is APAC payroll?
APAC payroll is the integration of a payroll system into some, or many of these APAC countries for an organisation. Usually provided by payroll providers as Software as a Service (SaaS), APAC payroll solutions assist in the rapid global growth to Asia-Pacific countries by ensuring both payroll administrative tasks and compliance are taken care of for foreign employees.
Why choose APAC advanced payroll?
Whether it is mergers and acquisitions or simply expanding your workforce to tap into foreign markets, APAC is considered an exciting investment destination for many businesses today. From the plethora of thriving industries, such as technology and E-Commerce, there to the innovative technological advances, APAC countries present many diverse opportunities.
The key reason, however, for many businesses choosing to expand into this region is the economic opportunity. With the value of mergers and acquisitions in the technology sector coming to approximately 10.9 billion U.S. dollars in 2019, this thriving hub for business is only continuing to grow.
Tapping into this fertile business ground can be supported by successfully integrating your payroll system. For example, expanding your workforce requires necessary standards to be met for both your business and the country in which you are expanding. Keeping track of this across the globe can prove challenging, but an effective payroll integration can aid business endeavours. Enrolling your employees and following regulation is key to support this smooth expansion, allowing you to track salary, tax and benefits.
Choosing an APAC payroll solution supports and enables this expansion into APAC regions due to its specifically designed features to support you in doing so.
Challenges of APAC payroll
If you are looking to expand into the rich business opportunities presented by the APAC region, then understanding the key challenges of integrating your payroll in APAC is part of that. Various countries mean various processes, whether that be language, time zones or payroll regulations itself. Understanding the challenges this presents to your organisation is key.
1. Language barriers
Communication is the key to international business relationships and understanding the potential challenges language barriers present is vital. Whilst English may be the most spoken language worldwide and is often adopted by many businesses, not all APAC countries use this as their business mother tongue.
Countries such as South Korea or Thailand, for example, have a lower English proficiency level than Singapore or, of course, Australia, for example. This may create friction when implementing payroll and may require specifically appointed English speakers in HR positions or translators, for example.
2. Payroll regulations
Another potential challenge to overcome when integrating your payroll in APAC countries is the differences in payroll regulations. Different countries will have drastically different payroll regulations in place than the US.
For example, a key consideration when expanding to Malaysia is that the tax system is territorial. Residents and non-residents of Malaysia are taxed on their Malaysian-sourced income, while foreign income often remains untaxed.
Understanding how to overcome these specific differences is vital but may prove challenging, especially in regard to tax across numerous countries.
Differences in payroll regulations may also have compliance implications, and requires heavy resource to enact all correct procedures, ensuring the protection of the company and workforce.
3. Time zones
With 11 different time zones in APAC, this presents another challenge when it comes to payroll. Whilst this may already be a challenge for many with US/UK business liaisons, for example, introducing payroll systems for multiple APAC countries may prove even more difficult.
Different time zones will affect procedure and communication, making it more difficult to unify payroll systems with US HQs. This may create conflicts when scheduling meetings or solving problems as they arise, for example. And if you are planning to integrate with more than one APAC country, you may face even more barriers.
4. Regional differences
A key challenge that comes with APAC payroll is the regional differences present in different countries. With different regions implementing different procedural payroll requirements, such as tax and social security for example, running one cohesive payroll system for one country can prove more difficult than first thought.
For example, you may be required to run separate payroll systems for each region in order to ensure both effective and legal payroll procedure. This is already a legal requirement in China, so if you were to run payroll in this country, you would need to run separate systems for each and every region as they present varying regulations. This presents itself as a large task for many businesses, something key to consider when looking to expand into APAC.
How IRIS FMP Global can help
Enacting global payroll assists in bridging the gap between the US and the exciting new market on offer from APAC countries. But keeping on top of different laws and cultures can prove an overwhelming task and requires support to overcome the challenges presented by this. Get in touch with IRIS FMP today to see how we can help you integrate advanced APAC payroll.