Taxing Times for Employees and Individuals - International Corporate Expansion

by Amy Waterhouse, BTG Tax, 1 February 2011

The world has become a far smaller place. Global trading and expansion is no longer an activity restricted to the largest and most wealthy of corporate entities.

With more and more businesses looking for opportunities to invest and trade in overseas jurisdictions, consideration must clearly be given as to how the business will be operated and managed.

Chief Executives, Directors and other staff are often seconded on short term or in some cases permanent assignments. How the business manages this physical process, establishes itself, moves it's people and monitors developments is complicated enough. However, thought must be given to the individual's fiscal requirements in the country to which they have been seconded or assigned.

Whilst the corporate entity's tax and accounting issues are often considered and dealt with effectively, questions which often should be addressed prior to the secondment of individuals, regularly remain unresolved. With global Tax Authorities increasingly exchanging information in respect of individuals, ensuring fiscal compliance has become an extremely hot topic.

Issues to consider

  • Will the individual's current remuneration and benefits lead to additional taxes or other disadvantages in the country they have been transferred to?

  • Will the individual potentially be subject to tax on the same income and benefits in the country of assignment as domestically?

  • What taxes will be due and payable by the individual and what will be payable by the business in respect of the individual?

  • How does the social security system operate and are there reciprocal benefits?

  • What if incorrect taxes are paid, will the business or individual be subject to penalties and interest?

  • Will property/living accommodation be provided for the individual or/and their family?

  • Do rewards and or share schemes cover more than one accounting period? If so how does this relate to the period of the period of assignment for tax purposes?

  • How can such issues be avoided?
The BTG Global Network is an international network of advisors currently located in 108 countries around the globe.

The network can therefore assist Australian businesses with their international business expansion, ensuring that the overseas requirements placed on it, it's employees and significant individuals are clear and adhered to.

BTG can provide a range of services from (but not exclusively) ad hoc advice in respect of 'one off queries' to a full assessment of the business' and each individuals obligations in the relevant jurisdiction. Furthermore, where appropriate BTG can also assist in administering any submissions required to be made to the Tax Authorities as a result of these obligations.

If your firm is intending to second, assign or permanently locate its individuals in overseas jurisdictions, please do feel free to contact Amy Waterhouse on 02 9089 8960 or at amy.waterhouse@btg-tax.com for an initial obligation free discussion.

Amy Waterhouse International Tax Services

BTG Tax Level 26, 44 Market Street Sydney NSW 2000

T: + 61 2 9089 8960 F: + 61 2 9089 8989 M: +61 412 663 881

www.btg-tax.com

Registered Tax Agent (No: 25462005)

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