Multinationals unprepared for expatriate tax and payroll issues

Multinational employers do not have the adequate procedures in place to track tax, payroll and immigration issues for employees on formal or informal overseas assignments, according to research by EY.

Its Your talent in motion: global mobility effectiveness survey 2013, which questioned 264 senior global mobility professionals, found that, despite this, 49% of respondents deploy employees into high-growth emerging markets where laws are constantly in flux.

The research found that 40% of respondents do not have a formal risk control framework to monitor payroll tax and social security compliance, while 31% have had to engage outside consultancies or firms to address violations.

The research also found:

  • 42% of respondents do not have a global talent management agenda.
  • Half of respondents said their mobility team is understaffed.
  • 78% of respondents said their global mobility function does not measure return on investment.

Stephanie Phizackerley (pictured), partner in the UK and Ireland global mobility practice at EY, said: “There is widespread frustration with the fact that many organisations do not want to address the task of minimizing and pre-empting risk. Too often, there is a tendency to wait or be aware of a tangible negative consequence before deciding to act.

“Educating the business outside of mobility to recognise the risk is a key first step, but it remains an enormous challenge that is likely to become even greater as we see more flexible-working arrangements and increased travel outside of traditional expatriate assignments into the high-growth, emerging markets.

“For employers deploying more of their people into these emerging markets, such undeveloped mobility policies and processes are restricting their ability to manage talent and run an effective programme.”

Dina Pyron, global director, human capital at EY, added: “With the globalisation of markets comes the need to have talent that understands, relates to and can compete in these diverse markets.

Mobility professionals can play a more effective role in strategic business planning, rather than focusing on immediate needs, to drive competitive advantage for their organisations.”