As a business owner, you understand the importance of managing payroll, from deducting income taxes to making retirement contributions. While payroll has similar qualities around the world, the regulations are different from one country to the next. When you expand to Tuvalu, you need to understand the local laws to keep your company compliant. Globalization Partners provides the support your need with payroll outsourcing.
Tuvalu has a flat income tax rate of 30 percent. As an employer, you’re responsible for deducting this tax from your employees’ paychecks before they receive them.
Employers are also responsible for withholding pension contributions for employees who are members of the fund. Employees must contribute 13 percent of their monthly income to the Tuvalu National Provident Fund (TNPF). Employers must contribute 10 percent.
Tuvalu Payroll Options
Your company has a few options for managing payroll when you expand abroad. To find the best method, you should consider your resources and how much liability you’re willing to hold. Your options include:
- Remote payroll management: Handling your payroll remotely involves using your payroll department at home. Your designated payroll professionals will handle payroll in your country of expansion, making sure to follow the proper taxation and compensation laws. This option can be helpful because it doesn’t require many resources, but there are legal risks if your HR team does not meet the taxation laws.
- Payroll processing company: You may choose to work with a processing company within the country. These professionals will have more expertise on the taxation laws, but your company will still be liable if they make a mistake.
- Internal management: When you have a subsidiary in Tuvalu, you can establish an internal payroll department similar to the one you have in your home country. While this arrangement gives you control, it requires extensive company resources.
- Global Employer of Record: Globalization Partners can act as your Employer of Record by hiring your employees and putting them on our payroll. We’ll handle the deductions process, distribute paychecks, and bill you at the end of the month with your employees’ wages. You won’t need to handle any payroll processing, and all liability will be on our shoulders instead of yours.
How to Set up Tuvalu Payroll
How you set up payroll will depend on the option you choose. Regardless of your management solution, you’ll need to obtain various registration numbers from your employees. Taxpayer Identification Numbers (TINs) allow you to submit income tax deductions, while TNPF membership cards allow you to make pension contributions. Keep these IDs on file for every employee.
If you want to establish an internal payroll department, you will need to incorporate a company in the country first. This process requires a company constitution and various government clearances. Your company will need extensive resources to establish this subsidiary, but you can apply for a TIN and TNPF membership card once you have an entity.
Termination and Entitlement
Tuvalu labor laws do not require any form of severance payment, regardless of the reasons for termination or dismissal. However, the TNPF will provide coverage in specific circumstances, including:
- Retirement at age 45 or older
- Mental or physical incapacitation
- Emigration to another country with no intention of returning
- Women leaving their positions to care for family
- Death of the employee
- Funding housing for employees 45 and older
- Emergency relief for a public emergency
Contact Globalization Partners for Payroll Outsourcing
At Globalization Partners, our team of HR and legal experts ensures our payroll practices are compliant in every country we cover. With payroll outsourcing, we take on the liability so you can have peace of mind and focus on developing your business abroad. Reach out to our team today to learn more.