Course Overview

Payroll Income Tax in Trading Companies

Introduction

Payroll income tax is imposed on the income of individuals from salaries, wages, and monetary or in-kind benefits received from their employment. It is a primary source of government revenue and contributes to achieving social equity.

What is Payroll Income Tax?

It is a direct tax withheld from employees’ wages and salaries by companies or employers, who then remit it to the tax authority.

• The employee ultimately bears the tax cost.

• The company acts as an intermediary, responsible for withholding and remittance.

How Payroll Income Tax is Calculated

1. Determine the employee’s total monthly/annual income.

2. Deduct statutory contributions (e.g., social insurance).

3. Apply the progressive tax brackets set by law.

4. Withhold the tax amount and pay the employee their net salary.

Importance of Payroll Income Tax for Companies

• Legal compliance: Companies must withhold and remit payroll taxes.

• Financial organization: Helps maintain accurate payroll records.

• Employee protection: Ensures fair tax calculation based on progressive brackets.

• Credibility: Enhances the company’s reputation with tax authorities.

Companies’ Obligations

• Register all employees within the tax system.

• Accurately calculate monthly or periodic payroll taxes.

• File regular payroll tax returns.

• Maintain payroll and tax records for the legally required period.

Conclusion

Payroll income tax is not just a financial obligation—it is a tool for transparency and fairness, ensuring that both employees and employers maintain a compliant and trustworthy relationship with the state.

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