Social Insurance Contributions and Payroll-Related Withholding
Scope
Tests contribution rates, payroll withholding, bases, caps and remittance.
Core rules
- Social insurance is separate from PIT but withheld through payroll.
- Employee contribution is generally 10% of wages; employer contribution is generally 12.5%, with accident insurance varying by sector.
- Contributions are calculated on wages within minimum and maximum bases.
- The employer withholds employee contributions and PIT, and remits both.
- Monthly remittance is due by the 10th of the following month.
- Expatriates and benefits in kind require careful treatment.
Worked example
Monthly salary = MNT 2,000,000. Employee social insurance at 10% = 200,000. Employer contribution at 12.5% = 250,000. PIT is calculated after the employee contribution and personal deduction. If the salary exceeds the maximum base, contributions are capped, but PIT is not necessarily capped the same way.
Traps
- Using the wrong base for contributions.
- Forgetting employer contributions are not deducted from salary.
- Treating social insurance as optional.
- Missing the remittance deadline.