Reporting & Payment for Businesses with Employees
Social Security & Healthcare Fund contributions are reported and paid on a quarterly basis. In this section, we will consider how business with employees should report and pay their quarterly contributions.
If your business does not have any employees, you can read how Businesses without Employees report and pay their quarterly contributions.
SS Contributions - Effective October 1, 2017, all Employers are obligated under the Law to withhold 7% of each employee's wages each pay period and at the end of each quarter, employers must pay 7% matching share. Therefore, a total of 14% of each employee's wages is reported and paid to the Social Security Office 1 month after the end of each quarter.
HCF Contributions - All Employers are obligated under the Law to withhold 2.5% of each employee's wages each pay period and at the end of each quarter, employers must pay 2.5% matching share to the Fund. Therefore, a total of 5% of each employee's total gross wages is reported and paid to the Social Security Office 1 month after the end of each quarter.
Employers who have employees may choose to report Owner's share as their presumed income twice the amount of the highest paid employee in any given quarter or may choose to report his/her actual wages/salary as a basis for contributions. Under the Law, they are considered both employer and employee at the same time. Therefore, they are required to contribute 14% for SS and 5% of total gross wages for the HCF.
If you own multiple businesses with employees, owner share may be reported using using presumed income or actual salary/wages. Read more about owner share if you own multiple businesses that do not have any employees.
Contributions for Domestic Helpers
Employers of domestic helpers must report and pay Social Security contributions for their employees on a quarterly basis. Effective October 1, 2017, SS contribution rate increased from 12% to 14% & HCF contribution rates for the employee remains the same; however, there is no owner share for the employer of a domestic helper. Download the Domestic Employer's Quarterly Tax Report Form.
How to Fill your Quarterly Report Form
Below is a sample of how a business with employees should report and pay SS & HCF Contributions with the Quarterly Report Form.
|Total Gross Revenue|
|The total gross revenue must match the gross revenue that is reported to Division of Tax & Revenue.|
|Gross wages for owner share is always twice the highest paid employee, whether or not they are actually receiving any income. In this case, $12,000 is the owner share. ($6,000 x 2)|
|SS Taxable Wages|
|The maximum taxable wage subject to SS tax is currently $5,000 per quarter. This will be the basis for how much SS tax must be paid. There is no maximum on how much gross wages is subject to HCF tax.|
|Calculate 12% of the amount found in column 4 which is the "wages subject to SS Tax". Remember that $5,000 is the maximum taxable SS wage.|
|HCF tax is 5% of gross wages, with no maximum ceiling. In this case, HCF tax is $600 or 5% of $12,000.|
Under the Social Security Law, all employers or business owners are required to submit their completed Quarterly Report Form every quarter. Please ensure that all information submitted on the Quarterly Report Form, such as EIN and employee SSNs, are accurate. Otherwise, a $1.00 per error will be charged to you.
Quarterly Reports are due one full month after the end of each quarter:
Employers who prepare their Quarterly Report form and mail them to the SSA must make sure that the postmarked date stamped on your envelope falls before or on the due date.
Under Part VI, Section 601 of the Social Security Operational Rules & Procedures, the SSA assumes that an employer or business owner is aware of the legal responsibilities of operating businesses within the Republic of Palau. The SSA has no obligation to remind employers of this responsibility. A claim of ignorance by any employer or business owner failing to report shall not be a valid legal defense for not reporting or non-payment of contributions.