What is hypothetical tax in SAP PA-GE - Management of Global Employees?

SAP Term: hypothetical tax

• Component: PA-GE

• Component Name: Management of Global Employees

• Description: Amount of tax an employee working abroad would have to pay if he or she were still working in the home country. An enterprise uses hypotax to determine the amount to be deducted from the employee's gross remuneration instead of taxes. This ensures that an employee on a global assignment is no better or worse off than if he or she continued to work in the home country.

Smart SAP Assistant

• Key Concepts: 
  Hypothetical tax is a tax that is calculated on the basis of a hypothetical salary, which is the salary that would have been earned if the employee had worked in their home country. This tax is used in the Global Employee Management (PA-GE) component of SAP to calculate the taxes that should be paid by an employee who works abroad. 
  
  How to use it: 
  The hypothetical tax calculation is done by first determining the hypothetical salary, which is based on the salary of a similar position in the employee's home country. This hypothetical salary is then used to calculate the taxes that should be paid by the employee. The taxes are then deducted from the employee's actual salary and paid to the relevant tax authorities. 
  
  Tips & Tricks: 
  When calculating hypothetical taxes, it is important to ensure that all relevant information is taken into account, such as the employee's home country, their current salary, and any applicable tax laws. Additionally, it is important to ensure that all calculations are done accurately and in accordance with applicable laws and regulations. 
  
  Related Information: 
  The Global Employee Management (PA-GE) component of SAP also includes other features such as payroll processing, benefits administration, and compliance management. Additionally, SAP provides a range of tools and resources to help organizations manage their global workforce more effectively.