Forum: Address tax and payroll issues that come with digitalisation

A generic photo of digitalisation. PHOTO: ISTOCKPHOTO

It was insightful to learn that close to half of the working professionals surveyed had concerns about accessing the hard skills to adapt to workplace automation and digitalisation (How to prepare for digital economy jobs, Dec 1).

Work, tax and payroll issues go hand in hand. As transformation efforts go into digitalising the Singapore economy, workplace digitalisation issues should be addressed in tandem with managing the attendant tax and payroll issues to achieve a balanced outcome.

For instance, there are tax implications arising from the changing nature of work due to digitalisation. The growth in the use of digital platforms could incentivise or otherwise induce changes in the work patterns and tax status of workers, for instance, from a contract of service, which is governed by standard employment contracts for salaried employees, to a contract for service, which is essentially a self-employed freelancer.

With these changes in tax status, different tax brackets and income tax rules will apply, not to mention social security contribution rates, as well as how businesses book their payroll costs.

Professionals working in digital economy jobs will also inevitably aspire to have a single consistent interface through which to access payroll and other HR products and services.

The key will be to integrate technologies - such as cognitive technologies, artificial intelligence and robotics - that enhance workers' HR digital experience and to deliver customised HR and payroll support for workers to access a full suite of payroll and HR services, from e-payslips to leave management and expense claims.

With all the focus on getting workers to acquire the hard skills to adapt to workplace automation and digitalisation, it behoves us to manage the attendant tax and payroll issues as well, if we are to have a balanced conversation on workplace automation and digitalisation.

Woon Wee Min

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A version of this article appeared in the print edition of The Straits Times on December 10, 2019, with the headline Forum: Address tax and payroll issues that come with digitalisation. Subscribe