Djibouti’s location on the Horn of Africa with both land and sea borders makes it a desirable place for companies looking to expand. The country also controls shipping access to the Red Sea, with the U.S. operating a naval base in the country as well. While your whole company looks forward to an expansion in Djibouti, you need to focus on how you’ll expand from setting up your payroll to establishing an entity.
Globalization Partners is a global PEO that makes it easier and faster to expand to countries around the globe. We’ll use our existing Djibouti subsidiary and Djibouti payroll outsourcing services to help you work without the risk of compliance. We’ll take care of everything from hiring talented employees who work for you to making sure they get the compensation and benefits they deserve.
Djibouti Taxation Rules for Payroll
Djibouti uses a progressive payroll tax scale that ranges from 2-30% depending on what an employee makes. On top of that, employees also contribute 4% of wages each month to social security. Employers contribute the same 4% to social security but are also required to pay 6.2% of monthly wages for disability insurance and 5.5% of monthly wages for family allowances.
Your Djibouti Payroll Options
You can choose from four main Djibouti payroll options:
- Remote: If your parent company already runs a large, global payroll, you can add your employees in Djibouti to it. Every employee from a different company will have different employment laws and tax regulations to follow, however.
- Internal: An internal payroll may be your first choice, but it’s usually a good option only for larger companies that have the resources for a big HR staff. You’ll also have to hire an expert in Djibouti employment compliance laws if you choose an internal payroll.
- Local outsourcing company: A Djibouti payroll processing company is one outsourcing option, but keep in mind that these companies cannot handle compliance, so you’ll still be responsible for tax regulations, employment compliance laws, and more.
- Global PEO: Choosing Djibouti payroll outsourcing with Globalization Partners is the only way to outsource your payroll and all matters of compliance. We’ll make sure you can focus solely on running your company.
Requirements for Setting up Your Payroll
Before setting up a Djibouti payroll, most companies will have to incorporate in the country. This process varies based on where you are and what kind of entity you set up, but it can take anywhere from a few weeks to a couple of months. Working with Globalization Partners doesn’t come with the same restriction, as we can use our Djibouti PEO to help you work without your own entity. We’ll use our subsidiary to hire employees on your behalf and add them to our compliant payroll so that you can concentrate on your business.
Termination and Entitlement Terms
Terminating an employee can be tricky in a foreign country, so we recommend adding termination and entitlement terms to all employment contracts before adding an employee to your payroll. You can terminate employees in Djibouti for gross misconduct, force majeure, economic or financial difficulties, court order, or a written agreement of both parties.
Contact Globalization Partners for Help
Globalization Partners wants to help you make the most of your expansion. Contact us today to learn more about Djibouti payroll outsourcing.