Checklist for going global

has become the norm thanks to growing interest in doing business globally, and the need for a global talent pool. It is a symbiotic arrangement between the company and its employees — companies benefit from the growth in new geographies, and employees gain a diversified professional and cultural experience.

To manage employee movement across the world, it is essential to have a dynamic assignment programme that caters to the needs of both the business and its employees. Below are some key points that any such assignment programme should cover.

Cost of the assignment: An effective cost estimate should cover benefits such as accommodation, security, travelling, dependents’ education, and per diem allowances. Additionally it should cover the tax and social security requirements for the duration of the assignment. It is important that the business and HR teams work together on this.

Immigration clearance: Issues related to immigration requirements, visas, minimum wage, work permit, and registration requirements in different countries should be dealt with before finalising the assignment. There are instances of individuals detained at the airport for not having the right visa.

Employment laws: All the documentation and processes should comply with the employment laws of the country of assignment. These include norms relating to minimum wages, notice period, working hours, overtime, and maternity leave.

Policies and procedures: Overseas assignments can be a source of anxiety on the issue of compensation and job security. Well-defined policies and procedures will help provide clarity both to the employee and the HR team.

Income and social security taxes: As taxes can disproportionately impact the cost of the assignment, it will determine whether the assignment is beneficial to the business or not. The tax cost would include outlays on tax, as well as compliance requirements. Companies should carefully study the laws and utilise the benefits available under tax treaties/ social security arrangements with foreign countries. It would be important to clearly define the rules of business in order to avoid exposures, such as creating a permanent establishment due to the presence of employees in foreign countries.

Trailing costs: When an assignment ends, it may not be the end of tax and social security implications in the host country. Long-term incentive plans can lead to a liability in the host country after the assignment is completed. Thus, the employer has to track the employees, and the payments made to them, for some time after the assignment.

A successful assignment programme is the result of strategic planning, proactive decision-making and relentless implementation. Moreover, in today’s business environment, the company’s compliance status will have an overarching influence on its reputation.

Amarpal S. Chadha is Tax Partner, Ernst & Young