The global economic landscape is constantly changing.
Rapid growth in international exports of goods and services plus foreign direct investment has changed how and where we do
business.
Technology has played a critical role in getting us there.
International growth is exciting for business and employees but all too often the eagerness to chase growth can detract from the importance of getting the right advice that
capitalises on the commercials of the opportunity.
Just as technology is helping businesses grow, it is also helping international governments know exactly who is operating in their country.
Businesses will be all too aware that when it was a short project in another country, quite often under the radar, an “in and out” approach was taken. The phrase “we were there for less than 183 days” can be heard ringing out in tax advisers’ offices across the world.
Overseas tax authorities are also aware of the potential tax they have lost over the years and have invested heavily in their own technology, linking the information on international arrivals with tax filings, social security exemptions and business registrations.
Permanent establishment, VAT and customs, immigration risks, employment tax, government regulations, individual traveller expenses, mobility policies and BEPS – there’s an incredible amount of information to manage when it comes to growing globally.
This much complexity often results in businesses doing one of two things. Either they block and tackle immediate threats as they arise or they succumb to information overload and do nothing.
The importance in getting things right from the outset is critical in securing value from the project.
While international opportunities come with complexities, these should not be blocks to growth.
For example, understanding all of the tax implications and the costs of compliance of a project at the outset will be the difference between making profit or not.
Surely it is better to have it built into the margin than deal with it when the tax authorities eventually come knocking for their share, when it becomes a sunk cost?
Failure to be compliant will have implications. We have all heard of employees being stopped at immigration and not being allowed to enter the country because the business hasn’t filed the right tax returns and met their compliance obligations.
Nobody wants to make that phone call to their client to tell them they can’t deliver the project.
What about the business that is looking to be compliant, though? It needs to get into the country quickly, source the easiest visa for its employees and then it will deal with the compliance after an honest approach.
What about when the visa is the trigger to being able to be compliant, though? Take working in the Gulf of Mexico for example. The wrong visa means employees can’t be added to a US payroll and taxes can’t be paid properly.
Then we have the business where the international growth has been so rapid, it doesn’t know which jurisdictions they are operating in or where their people are, and consequently where they may be triggering compliance obligations.
In any of the above scenarios, having an adviser who is a partner to your business and understands the importance of providing practical advice in a tight timescale, along with providing you with the right tools to monitor your compliance risks and track your people, will make sure that you win the opportunity at the right margin and the right cost.
Helen Brown, international tax director at Anderson Anderson & Brown LLP
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