Local Government Tax is the name Outstaffer uses on invoices and in the cost of employment platform for any government tax Outstaffer is required to pay in the country where your employee is located. It is not a single tax: the tax behind the Local Government Tax line depends on the country. Outstaffer passes it through to you as part of the cost of employment.
Note: At present, the Local Government Tax line appears for employees in the Philippines and Thailand. Each country has its own article explaining the charge in full.
Which tax is it in each country?
Each country's Local Government Tax line recovers a different tax, worked out on a different base:
Country | Tax behind the line | How it is worked out |
Philippines | Local business tax, charged by the local government to Outstaffer's Philippine company | 1% of each employee's total payroll |
Thailand | Value added tax (VAT), charged to Outstaffer by our local payroll partner in Thailand (and by our local office partner on office costs) | 7% of each employee's total payroll, plus 7% of office costs where provided |
Total payroll means base salary, statutory contributions and other payroll entitlements such as leave and allowances (and in the Philippines, 13th month and night differential). The Local Government Tax line is never charged on the EOR Premium, health insurance or equipment.
For the full explanation, calculation and legal basis in each country, see:
Is Outstaffer making money from this charge?
No. The Local Government Tax line recovers a tax that is charged to Outstaffer, or to its local payroll partner, by law. You are not the taxpayer: Outstaffer passes the tax through to you as part of the cost of employment.
A pass-through of the cost of employment: the Local Government Tax line uses the same rate the tax is charged at.
Only payroll-related tax is passed through: in the Philippines, Outstaffer pays the local business tax on its own non-payroll receipts, such as the Cross Border Fee and the funds for its own staff and operations. In Thailand, Outstaffer pays the VAT on its local payroll partner's fees itself.
Your Terms of Service: under our Terms of Service, you agree to pay the full Cost of Employment for your team. Cost of Employment includes "local government, municipal and statutory registration, filing and compliance costs" (clause (g)) and "any value added tax, goods and services tax, sales tax or similar indirect tax imposed on any supply made to or by us in connection with the employment" (clause (f)).
Where you will see the charge
On your invoice: one line per employee, described as Local Government Tax, listed with that employee's payroll lines, in your billing currency.
In the cost of employment platform: one line per employee, shown as Local government tax in the compliance section.
After payroll is run: any difference is adjusted on a reconciliation invoice or credit note, with a line ending "Local Government Tax Reconciliation".
What happens if this charge is not paid?
The Local Government Tax line is part of your monthly Subscription Invoice. It is due and payable in full, with the rest of the invoice.
Your Subscription Invoice funds your team's payroll. Outstaffer needs the full invoice paid in cleared funds by the payroll cutoff: 11:59pm on the 28th of the month (Melbourne time), or the 27th (local time) for Clients in the United States, to release your team's next payroll. Under our Terms of Service, invoices for EOR Services must be paid in full, even if part of the invoice is disputed.
If your Subscription Invoice is short-paid, including by leaving out the Local Government Tax line, your team's payroll may not be released on the scheduled pay date.
If you have a question about the Local Government Tax line, pay your invoice in full and raise the question with your Customer Success Manager.
Who to contact
Questions about the Local Government Tax line or your invoice: contact your Customer Success Manager. You can book a call or send a request from the My Team page in the Outstaffer platform, or email your Customer Success Manager directly. See How to Contact Your Customer Success Manager.