Here are 7 common items included in the calculation of payroll taxes across the world:

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1. Gross Salary / Wages

• Definition: Total earnings before any deductions (including bonuses, overtime, and commissions).
• Importance: It’s the base for calculating payroll taxes and contributions.

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2. Employee Social Security Contributions

• Examples: Contributions to pension, unemployment insurance, or disability insurance schemes.
• Who pays: Deducted from the employee’s gross salary.
• Varies by: Country (e.g., National Insurance in the UK, Social Security in the US, CPP in Canada).

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3. Employer Social Security Contributions

• Definition: Similar contributions made by the employer on behalf of the employee.
• Note: Often higher than employee contributions in many countries.

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4. Income Tax Withholding (PAYE)

• What it is: Personal income tax withheld at source from an employee’s paycheck.
• Acronym: Often called PAYE (Pay As You Earn) in many jurisdictions.
• Based on: Income level, tax brackets, and personal allowances.

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5. Health Insurance Contributions

• Employee + Employer: Often both contribute to public or mandatory health insurance schemes.
• Example: Medicare (US), NHS (UK – via National Insurance), SHI (Germany).

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6. Unemployment Insurance

• Purpose: Funds unemployment benefits in case of job loss.
• Structure: Mandatory in many countries; usually a % of gross wages paid by employer, employee, or both.

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7. Pension Fund Contributions (Mandatory)

• What it covers: Retirement savings, typically part of social security.
• Examples: Provident Funds (India), CPP (Canada), Superannuation (Australia).
• Can be: State-run or private but regulated and often compulsory.

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Optional but sometimes relevant:

• Occupational accident insurance
• Training levies
• Local taxes / municipal payroll taxes

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Disclaimer-contact your tax consultant for a detailed information on payroll; we disclaim all liability arising on reliance on this note