Payroll

Emerging Markets Payroll (EMP)

Emerging Markets Payroll (EMP)

Emerging Markets Payroll (EMP)

Emerging Markets Payroll (EMP)

Axiomatic is excited to announce that we have formed a payroll alliance that extends our coverage of 43 African countries, now includes an additional 37 emerging market countries.

Emerging Markets Payroll (EMP) is a payroll alliance of three specialist Regional Payroll Providers that collectively offer comprehensive payroll support for 80 countries in emerging markets across Africa, Asia Pacific, and Latin America.

Our alliance partners are:

Links International – the company was established in 1999 and provides services across the Asia Pacific region in 20 countries.

Payroll Worldwide – the company was established in 2007 and provides coverage in Latin America in 14 countries.

At EMP, our team of 320+ is committed to streamlining and simplifying your payroll processes in emerging markets using secure cloud-based technology. Further, EMP’s ability to integrate with leading HCMs including Workday, SuccessFactors, and Oracle HCM will ensure a seamless journey for your business.

Elevate Your Role with EMP's Payroll Outsourcing Services

Looking for a payroll provider who knows the ropes? Axiomatic EMP Services helps you save time and cut costs. Get in touch today for a free consultation.

Emerging Markets Payroll (EMP) Read More »

Africa: 2023 Inflation and Salary Increase

Africa: 2023 Inflation and Salary Increases

Africa: 2023 Inflation and Salary Increases

Africa: 2023 Inflation and Salary Increase

Africa Salary Increases

Salary increases are inescapably linked to inflation; where inflation is one of the most important determinants when deciding on the amount of the salary increase. Other factors must also be taken into consideration such as financial constraints of the employer, growth rates in the country and general market and/or economic conditions.

The next consideration is to determine a “real increase”. A real increase is defined as the increase after inflation has been considered. As an example, if the salary increase is 6.0% and inflation is 5.0%, then a 1.0% real increase has been granted.

Future inflation is usually employed as this more accurately compensates the employee for the expected ravages of inflation and the negative effect on their purchasing power in the new year- rather than historic inflation.

While this is undoubtably the correct methodology to derive a scientifically formulated salary increase which is equitable to all stakeholders, inflation forecasting errors do occur. Inflation in African countries is notoriously difficult to predict for the primary reason that it is extremely sensitive to two important drivers namely, local currency and food prices. The foreign exchange markets in African countries are illiquid and thus any depreciation in the currency tends to be over exaggerated with the consequence of higher imported inflation. Further, food prices are constantly influenced by bad harvests and adverse weather conditions.

Given this, before one commences with the new salary increase exercise, it is prudent to look in the rear-view mirror to ascertain the actual “real salary increases” employees received the previous year. In the table below we have calculated the average 2023 inflation rate for selected countries, together with the Axiomatic recommended salary increase for 2023 which we suggested in January 2023. The final column displays the real salary increase or decrease:

Represents Axiomatic’s forecast

Clearly, employees in Ethiopia and Ghana received a significant negative real increase in 2023. Employees in Angola and Zambia were also negatively affected by unexpectedly high inflation albeit to a lesser extent.

While the normal practice is not for the employer to “make good” the negative real salary increase in 2024, cognisance should be taken of the erosion of the Ethiopian and Ghanian employee’s net pay in 2023, if possible.

About Axiomatic

Axiomatic currently runs both insourced and outsourced payrolls in 44 African countries on a cloud-based platform that is ISO27001 accredited.

In addition, we have significant experience integrating the payroll platform with SuccessFactors, Workday, and other related systems.

Should you wish to know about our offering, please:

Africa: 2023 Inflation and Salary Increases Read More »

Africa: January 2024 Employee Tax Changes

Africa: January 2024 Employee Tax Changes

Africa: January 2024 Employee Tax Changes

Africa: January 2024 Employee Tax Changes

The fiscal year of several African countries is from January to December. Consequently, a raft of legislation is promulgated at the end of each calendar year which becomes effective on 1 January of the following year, and which affects the tax deducted from employees and/or changes the cost of employment for employers.

Below we have highlighted changes, effective 1 January 2024 in the following countries:

TOGO - Universal Health Insurance

On 11 October 2023, The Council of Ministers, under the chairmanship of the President of the Republic adopted seven decrees which would in effect accelerate the process of implementing universal health insurance. The universal health coverage aims to achieve equal access to essential or primary health care for all. The Government aims to complete the rollout of the universal health system by 2025.

The proposals that will impact the Client’s payroll include the following:

    • The contribution base for salaried workers is the basic salary and all taxable bonuses and allowances, excluding reimbursements of expenses and family benefits.
    • The amount of remuneration used as the basis for calculating the contributions cannot be lower than the Guaranteed Interprofessional Minimum Wage (SMIG) which is currently fixed at 52.500 CFA per month.
    • It is important to note that if a worker is employed by several employers, each of them is responsible for the payment of the calculated share of contributions in proportion to the remuneration he pays to the person concerned.
    • Contribution rate: The contribution rate is set at 10% of the monthly remuneration, of which at least 50% is payable by the employer and the remainder is payable by the employee.
PAYROLL IMPACT

The deduction towards Universal Health Insurance will add a burden to the employee and it will also be an additional cost to the employer.

ANGOLA - Tax Table Changes 2024

The General State Budget (OGE) for 2024 was approved by the National Assembly on 13 December 2023 and enacted on 26 December 2023. The amendments to the 2024 Economic Year (OGE-2024) appear in Law No. 15/23, of 29 December 2023 (OGE-2024 Law), and in all its annexes. The Law, and concomitantly the changes to payroll, are effective from 1 January 2024.

Article 20 amends the Employment Income Tax Code (Imposto sobre os Rendimentos do Trabalho) and will affect employee’s taxes as follows:

    • Income earned up to a limit of Kz 100,000 per month is now exempt from IRT. Previously the zero-rated bucket was set at Kz 70 000 per month.
    • The old tax brackets have been amended for the 2024 tax year- refer to the table below.
    • The 10% bracket of Kz 70 000 to Kz 100 000 is removed.
New Tax Tables for 2024
PAYROLL IMPACT

The changes to the tax table will provide some relief to employees at all levels of income.

However, cognizance should be taken of the fact that Angola has experienced high inflation over the second half of 2023 (refer to the graph below) which will have eroded employees purchasing power. Any reduction in taxes paid in 2024 will therefore be a welcome relief.

IVORY COAST - Tax Changes 2024

The Presidency of the Republic published ‘Ordonnance No 2023-179 du 13 September 2023″ which will take effect on 1 January 2024. The consequence of the Ordinance is a comprehensive reform of the calculation of personal taxes relating to salary, wages, pensions, and life annuities. The reform is the result of suggestions by the IMF which stated that the previous “… personal income tax regime is complex and regressive”.

Previously, ITS comprised of three different taxes which were payable by the employee, namely:

    • IS (Tax on Salary/Wages) which was 1.5% of 80% of taxable employment income.
    • CN (National Contribution) which was taxed at progressive tax tables based on 80% of taxable employment income, and
    • IGR (General Income Tax) which was calculated using a specific formula and progressive tax tables, taking into consideration the employee’s family situation.


The ITS reform consists of the following:

    • Merging the three taxes payable by the employee (IS, CN, and IGR) into one single payroll tax.
    • Adopting a progressive tax table (which will consist of 6 brackets).
    • Instituting a tax reduction/credit mechanism for dependents to replace the family quotient, to consider the employee’s family situation. For example, if the employee is:
      • Single, divorced, or widowed with no children, will have 1 share,
      • Married individuals with no children, single or divorced individuals with one dependent child will have 2 shares,
      • These values will increase with 0,5 shares for each additional dependent child limited to 5 shares, or it will increase with 1 for each disabled minor or adult dependent child.
    • Establishing a zero-rate tax bracket for monthly taxable employment income less than 75,000 francs per month.
    • Increasing the monthly exempt portion of retirement pensions and life annuities from 300 000 francs to 320 000 francs.
    • Reducing tax on retired employees over 70 years of age, by reducing the tax with an abatement of 75%.
    • The standard abatement/deduction of 20% will be repealed and the progressive tax tables will be applied to 100% of the taxable employment income.
New Tax Tables for 2024
Tax Rebate Table for Family Charge 2024
PAYROLL IMPACT

In general, most employees will experience a small increase in net take-home pay. Some employees will experience slightly higher taxes and concomitantly, lower take-home pay. This will depend on the number of dependents which is applied to the above Tax Rebate for Family Charge table.

ZAMBIA - Tax Table Changes 2024

The 2024 Budget Address was enacted on 26 December 2023 and thus the legislation and the impact on payroll will become effective on 1 January 2024.

Limited changes were made to the tax tables:

    • The exempt threshold has increased from K4 800.00 to K5 100.00 per month.
      • This represents an increase of 6.25% which is disappointing given that inflation in November 2023 was 13.1%.
    • The marginal tax rate for the highest income bracket has been reduced slightly from 37.5% to 37.0%.
Annual Tax Table
PAYROLL IMPACT

The increase in the exempt threshold as well as the reduction of the highest income tax bracket will benefit all employees, and their net income will increase marginally.

NAPSA Ceiling Increase 2024

The National Pension Scheme Authority is mandated to review the contribution ceiling and pension payments annually and adjust them in line with any change in the National Average Earnings (NAE).

This is in accordance with Section 35 of the National Pension Scheme Act No 40 of 1996. The NAE figure for 2024 has increased to K7,454.00 from K6,710.00 in 2023 as determined by the Zambia Statistics Agency.

Accordingly, on 4 January 2024, the National Pension Scheme Authority advised that the maximum monthly employee contribution for the year 2024 has been revised to K1,490.80 from K1,342.00- an 11% increase. Given that the employee and employer both contribute 5%, the maximum total monthly contribution will increase to K2,981.60.

    • The contribution rate remains unchanged at 10% of an employee’s monthly gross earnings; and
    • For NAPSA purposes, earnings refer to any benefit given by an employer in exchange for the employee’s service. Earnings therefore include basic salary, bonuses, commission, severance pay, overtime allowance, leave allowance, acting allowance, and commuted leave days.
PAYROLL IMPACT

The upward adjustment to the ceiling will increase the contributions of most employees and concomitantly have a direct impact on their net pay.

NIGER - ANPE Contribution Increase

Currently, employers are required to pay 0.50% of the employee’s social security base to the Agence Nationale pour la Promotion de l’Emploi (the Employment Promotion Agency or ANPE). This government organisation is responsible, among other things, for jobseeker placements and contribution to the development and implementation of a national employment policy, through the implementation of programmes of integration and reintegration of the unemployed

In accordance with Decree No. 2023-258/P/CNSP/MFP/T/E of November 3, 2023, which modified and supplemented Decree No. 2002-277/PRN/MFP /T of November 29, 2002, employers in the para-public and private sectors are informed that the rate of the employer contribution has increased from 0.5% to 1% of the payroll, from 1 January 2024.

The contribution is recovered by the National Social Security Fund (CNSS) according to the same terms as social contributions.

PAYROLL IMPACT

This contribution is only made by employers and as such, there will be no impact on employees. It will however increase the employment cost for companies.

About Axiomatic

Axiomatic currently runs both insourced and outsourced payrolls in 44 African countries on a cloud-based platform that is ISO27001 accredited.

In addition, we have significant experience integrating the payroll platform with SuccessFactors, Workday, and other related systems.

Should you wish to know about our offering, please:

Africa: January 2024 Employee Tax Changes Read More »

African Payroll: DRC Inflation & 2024 Salary Increases

African Payroll: DRC Inflation & 2024 Salary Increases

African Payroll: DRC Inflation & 2024 Salary Increases

African Payroll: DRC Inflation & 2024 Salary Increases

The Democratic Republic Of Congo (DRC) has a significant dollarized economy which is a legacy of extremely high inflation during the rule of Mobutu Sese Seko. Like Zimbabwe and some other African countries, US dollars are accepted in restaurants and shops and big-ticket-item purchases are usually made in US dollars. Estimates of the degree of financial dollarization in the economy are around 90%.

Given the dollarisation of the economy, the rapid depreciation of the currency, the Congolese Franc (CDF), from May 2023 is of grave concern.

US$ to CDF: 1 YEAR

Despite the currency depreciation, we remain relatively bullish on growth in the DRC as evidenced by the table below. This is relatively good news for future corporate profits.

HISTORIC AND PROJECTED DRC REAL GDP

2018
5.8%

2019
4.4%

2020
1.7%

2021
6.2%

2022
8.9%

2023 (*)
6.5%

2024 (*)
6.4%

* Represents Axiomatics’ forecast

While growth is expected to remain relatively strong, the economic theory postulates that a depreciating currency, exacerbated by a highly dollarized economy, must lead to higher inflation- and this is exactly what has transpired. The graph below clearly illustrates that inflation has moved significantly higher during the first half of 2023.

As Comp and Benefit practitioners are acutely aware, one of the most important inputs into the salary increase decision is the projected future inflation. While it must be acknowledged that there is no generic or standard methodology in Africa where one can state that the salary increase would be a real increase of, for example, 1.0% (the projected future inflation rate plus 1.0%) – one must accept that high inflation typically does concomitantly mean higher salary increases. Such salary increases must be tempered by the financial affordability of the company and the macroeconomic environment of the specific country.

DRC salary increase forecasts for 2024 are therefore extremely difficult to estimate.

The central bank has tightened monetary policy significantly. At the 8 August 2023 meeting, the policy rate was increased by 14.0% to 25.0%- the highest level in over a decade. The rationale for the extraordinary increase was justified because of the “… accentuation of pressures on the exchange rate and inflation”.

One will have to wait for more incoming inflation data to gauge whether the August 2023 draconian policy rate increase and the tightening of monetary policy, arrest the upward inflation trajectory and reduce the inflation rate in 2024.

However, employers should budget for significantly higher salary increases for 2024 than those granted in 2023.

The caveat to the above assertion is that higher salary increases in 2024 would only apply to employees being paid in CDF. Local employees being paid in US$ would have experienced an increase during the year to date of 28% in their local purchasing power due to the exchange rate having depreciated from 2,050 to 2,625- less of course, the applicable inflation rate.

A further action that employers can consider, is to ensure that employees are enjoying all permissible allowances and exempt income, in accordance with the applicable legislation and tax regulations. These exempt or partially exempt items include inter alia:

    • Pension contributions
    • Housing allowance: for a value not exceeding 30% of gross salary.
    • Transport allowance
    • Family allowance
    • Telephone charges (professional use)
    • Home leave for assignee and family
    • Business trips
    • Medical charges

About Axiomatic

Axiomatic currently runs both insourced and outsourced payrolls in 44 African countries on a cloud-based platform that is ISO27001 accredited.

In addition, we have significant experience integrating the payroll platform with SuccessFactors, Workday, and other related systems.

Should you wish to know about our offering, please:

African Payroll: DRC Inflation & 2024 Salary Increases Read More »

African Payroll: Zimbabwe Inflation and 2024 Salary Increases

African Payroll: Zimbabwe Inflation & 2024 Salary Increases

African Payroll: Zimbabwe Inflation & 2024 Salary Increases

African Payroll: Zimbabwe Inflation and 2024 Salary Increases

Compensation and Benefits practitioners have struggled in Zimbabwe over the last few years.

The difficulty emanates from the problem that when inflation reached 786% in May 2022, companies adopted different remedies to alleviate the plight of employees. Some introduced an inflation/ hardship allowance, others simply increased basic pay, others adjusted the mix of remuneration between Zimbabwe dollars and US dollars, while others paid employees fully in US dollars. This has made it extremely difficult to benchmark salaries in the country and, to scientifically formulate an annual salary increase.

Another curve ball has now been presented to Comp and Ben practitioners, in that the methodology to calculate official inflation figures in Zimbabwe, has changed for the second time this year.

Budgeting for salary increases in 2024 has probably already commenced and as inflation is a significant element in determining such increases, alarm bells have started ringing.

The following are the historic official inflation rates:

Inflation was 285% in August 2023 and began to slow to 230% in January 2023.

At the February 2023 MPS meeting the minutes state – “It is, however, important to note that the ZW$ inflation is no longer a true representative of the cost of living in Zimbabwe as the country is in a dual currency system where prices and household incomes are also in both USD and local currency. In this context, Zimbabwe’s inflation needs to be recalibrated to reflect the dual currency nature of incomes and prices in the economy to provide a true reflection of the cost of living in the country. Therefore, and as was unanimously agreed by MPC, it is essential and logical that the blended rate of inflation should be the reference rate of inflation in Zimbabwe.”

With the release of the February 2023 inflation figure, the Zimbabwe National Statistics Agency (ZimStat) officially migrated from announcing Zimbabwe dollar (ZWL) inflation statistics to blended inflation reporting. Blended inflation is simply a weighted average increase in general prices based on ZWL and the United States dollar (USD) to take cognisance that 77% of market transactions were conducted in US$’s.

Inflation therefore decreased from 230% in January 2023 to 92% in February 2023.

Another curveball was delivered in September 2023 when ZimStat announced it had adopted a “geometric aggregation method” of calculating inflation and not the arithmetic-based calculation of blended inflation, which it adopted in February 2023. They stated that the new method would improve accuracy as it was based more on US$ pricing.

Inflation therefore decreased from 77% in August 2023 to 18% in September 2023.

Given that inflation is a significant input into the determination of a salary increase for 2024- what is the inflation rate?

Let’s assume that for now we completely trust the official inflation rate of 18% in September 2023. If your company is:

    • paying employees in US$, then the inflation rate applicable to them (the erosion of their disposable income) is less than 18% – included in that figure is 20% ZWL inflation which is significantly higher.
    • paying employees in ZWL, the inflation rate applicable to them is significantly higher.
    • paying employees, a portion of their salary in US$ and a portion in ZWL, their applicable inflation rate depends on the percentage split between the two currencies.

Concomitantly, the official inflation rate of 18% is not a good indicator of a proposed salary increase for 2024.

It is impossible to provide a generic proposed salary increase for Zimbabwe this year- each company will have to examine past salary increases, previous inflation/ hardship allowances, the current currency split paid to employees, and a plethora of other factors to determine a salary increase for 2024 which is equitable to all stakeholders.

About Axiomatic

Axiomatic currently runs both insourced and outsourced payrolls in 44 African countries on a cloud-based platform that is ISO27001 accredited.

In addition, we have significant experience integrating the payroll platform with SuccessFactors, Workday, and other related systems.

Should you wish to know about our offering, please:

African Payroll: Zimbabwe Inflation & 2024 Salary Increases Read More »

African Payroll: Zimbabwe New Tax Tables

African Payroll: Zimbabwe New Tax Tables

African Payroll: Zimbabwe New Tax Tables

African Payroll: Zimbabwe New Tax Tables

Relief at last for employees

Public Notice No. 51/2023, issued on 10 August 2023 by the Zimbabwe Revenue Authority (ZIMRA) significantly changed the local currency employment tax bands and tax rates with effect from 01 August 2023, in a bid to provide relief to taxpayers.

Importantly, where clients pay employees in US$’s, these bands and tax rates remain unchanged.

The new tax tables are enumerated below:

Why this seemingly generous concession by ZIMRA?

Persistently high inflation, elevated interest rates, and a depreciating and volatile Zimbabwe dollar have combined to fuel a cost of living crisis for households which has seen employees (being paid in local currency) disposable income being severely reduced.

The high inflation rate in Zimbabwe is clearly demonstrated by the graph below:

The new blended inflation calculations use 77% US$ and 33% RTGS inflation to calculate the blend.

Given the high inflation rate, employees have been receiving significant salary increases and/or hardship allowances to keep up with the ever-increasing cost of living, only for employees to pay higher taxes because the salary increases push them to a higher tax bracket.

The Permanent Secretary for Finance and Economic Development stated, ”Due to recent macroeconomic changes that necessitated salary reviews, a significant number of employees are caught up in bracket creep, consequently, some salaries and wages are subject to higher rates of tax. In order to provide relief to taxpayers…Treasury has approved a review of the local currency tax tables with effect from 1 August 2023.”

The increase in the tax brackets will provide welcome relief to local currency-paid employees, who have seen their purchasing power continually (and dramatically) decrease over the last three years.

Employers (HR and Payroll) can expect a flood of questions from employees when the August payslips are published.

About Axiomatic

Axiomatic currently runs both insourced and outsourced payrolls in 44 African countries on a cloud-based platform that is ISO27001 accredited.

In addition, we have significant experience integrating the payroll platform with SuccessFactors, Workday, and other related systems.

Should you wish to know about our offering, please:

African Payroll: Zimbabwe New Tax Tables Read More »

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