Monday, October 20, 2014

Payroll Korea - Tax Deductions and Tax Credits

In SAP Payroll Korea, there are a number of standard tax deductions and tax credits built in the system before generating the actual taxable income. For the deductions that took place, technical wagetypes that reflect those deductions will be generated such as 
/Y2D (Earned income deductions)
/Y2E (Adjusted Income)
/Y3E (Basic Deduction for Employee)
/Y3G (Spouse Deduction)
/Y3S (Old Age Deduction)
/Y3T (Handicap Deduction)
/YSG (Single Parent Deduction)
/Y5T (Donation Deduction)
/Y4C (Insurance Deduction)
/Y70 (Housing Deductions)
/Y7M (Overseas Income)

This spreadsheet attempts to list out these tax deductions according to category, along with the limits or capping that applies for each deductions. The constants name from T511K or T511P that holds these limits are also listed in the spreadsheet.

Also included in the spreadsheet is a list of cumulation classes and its corresponding technical wagetype that it will generate for non taxable wagetypes.
For example, a non taxable Meal Allowance can be configured by flagged it into /132. After payroll is run, the technical wagetype that is generated is /3N2. This will be reported in the Year End Tax Report as a non taxable income. The constant name and the limit amounts that the system will validate against, is also listed in the spreadsheet.

Korea Payroll : PC00_M41_YEA_LST / Withholding Earned Income Tax List / Page 2 Obligatory or Non Obligatory Non Taxable Allowances

Report Name: Withholding Earned Income Tax List or The Payment List of Withholding Tax

This spreadsheet list out the non taxable allowances/technical wagetypes from SAP Korea Payroll such as 

/3NV - Overseas non taxable
/3NU - Overseas non taxable
/3N3 - Overtime Allowance
/3NA - Childcare
/3NH - Foreigner Salary
/3NI - Foreigner Bonus
/3NJ - Research Allowance K
/3N6 - Reporter Allowance
/4TR - Medical Insurance
/4UR - Long Term Care Insurance
/3N2 - Meal Allowance

that needs to be reported in the Year End Tax Reports. Generally non taxable allowance wagetypes are reported on Page 2 in the Withholding Earned Income Tax List report. It is also separated into two categories - Mandatory or Non Mandatory.

This spreadsheet helps to determine which wagetype will appear in which section within that report. Obligatory or Non Obligatory?