'Indian employees highest tax payers in Asia'

Employees in India are the biggest contributors to the government's coffers among their Asian peers on the basis of percentage of gross salary paid towards taxes and other payments such as social security contributions, according to a new study.

Indian employees take a deduction of as much as 29.1% from their gross salary as against just 5% in UAE, making it home to the world's most benign personal tax environment, international HR consultancy firm Mercer said in a report published today.

UAE does not assess any income tax, and the 5% deduction from an employee's gross salary is towards the country's social security contributions.

Mercer's Worldwide Individual Tax Comparator Report analysed the tax and benefits systems across 32 countries focusing on personal tax structures, average salaries and marital status.

The survey also found that married employees are better off than single employees while married employees with two children fare the best.
"Marital status is still a major factor in determining local tax rates. The data highlights the fluctuation in tax rates applied according to an employee's income level and marital status," the report said.

However, not all taxation systems vary according to marital status and married employees in Brazil, India and Turkey have similar tax rates to single employees.

In the global list for single employees, UAE is followed by Russia with a tax rate of 13%, Honk Kong (14.2%), Taiwan (14.6%) and Singapore (16.4%).

Among the Asian countries, India ranks at the lowest position with higher tax rates than other nations in the region. In the global list for single employees, India has been ranked at 14th place, for those married and having no children at 20th position, and is ranked 22nd for people who are married with two children.

At the bottom of the rankings, single managers in Hungary (30), Denmark (31) and Belgium (32) pay 48.5%, 48.6% and 50.5%, respectively, of their gross income in taxes and social security contributions.

According to Mercer, the data would be used by multinational companies to structure pay packages for their expatriate and local employees.