New global study looking at the tax and pension issues facing Internationally Mobile Executives (IMEs)
Supplied by Blick Rothenberg
The study was jointly conducted by leading accounting practice Blick Rothenberg in collaboration with the Exeter Business School, a leading centre of international business education and research.
Mark Abbs, Head of Global Mobility at Blick Rothenberg, said: “The study shows that the current global tax system has a number of challenges and potential barriers at a time when business and political leaders are extolling the virtues of globalisation and international trade deals. If we can get the global tax system right then that will enhance everyone’s ability to trade globally.”
Globalisation has dramatically changed the way in which multinational enterprises conduct their business across the world, increasing the demand for IMEs to exploit the rapid growth of emerging markets.
The tax and social security systems in individual countries are the product of long history, adaptation to worldwide developments and political, cultural and social considerations. While there are similarities between each set of rules and practices, the detail varies significantly from country to country. We found significant risks and uncertainties attached to the complex interaction of national tax rules, together with bilateral and multilateral treaties that do not always eliminate additional taxes and charges.
While much of the world’s attention is currently focused on the taxation of corporate profits, the complexities and risks associated with other aspects of tax systems go largely unnoticed at the international level. Tax rules can be particularly difficult for IMEs who are deemed as short term business visitors.
The tax consequences of moving from country to country are complex. Not only is the tax code of the country in which the individual is supplying services of relevance, but the tax code of the country of which the IME is a citizen, or even that of another country might also be of relevance. This is further complicated by agreements at regional level such as within the EU and bilaterally between countries.
Mark said: “We should encourage governments to use tax policy as a tool to make it easier and less complex for internationally mobile executives to work across borders. Tax policy has a clear role to play in making it easier for employees to be mobile and paving the way for strong, sustainable growth, particularly now with the unprecedented growth in the number of employees working outside their home countries. It is also critical that we move to a universal tax measurement or index to help mobility.”
The study also recommends:
• Making relief for double tax more efficient.
• Making pensions more mobile and develop a truly international pension system.
• Developing global payroll relief to reduce double wage withholding issues - negative cash flow is a growing issue for IMEs.
• Tax advisers must have a broader knowledge of these complex issues with an understanding of how the corporate, personal and employer tax issues align and fit together.
• Employers must have a better understanding of how to manage the combined tax, HR and payroll issues relating to IMEs.
To read the full report please visit: http://www.blickrothenberg.com/Taxation-of-Internationally-Mobile-Executives/TIME-Study
If you have any questions about the content included in this report then please contact Mark Abbs