Global Tax Compliance Tips for International Success

Global Tax Compliance Tips for International Success

Global tax compliance is one of the most difficult elements of growing and maintaining an international business. Even if your company is a well-oiled compliance machine domestically, that does not ensure international success. There are many challenges when working multi-nationally, including communications, language barriers, shifting regulatory environments, disparate sources of information, and complicated currency exchange. Your success in staying fully compliant in multiple jurisdictions depends on which solution or a combination of solutions you choose for operating your international payrolls.

Do not fret though, there are ways to achieve global tax compliance without all the headaches. Here are some expert tips for keeping your multiple country auditors and regulators at bay:

• Eliminate Manual Entry

We can’t tell you how many errors we have seen with clients in the past purely because they relied on manual data entry. You might be able to catch errors in manual entry domestically, but adding foreign regulations, exchange processes and language differences into the audit process can make errors almost impossible to find. The thing to consider is not necessarily the typical average of 1-2% of errors in manual data entry; it’s the extra time and risk involved in correcting such errors with the added challenges of being global.

If the information going into the payroll changes is wrong, the resulting calculations and reporting will almost certainly be wrong as well. And it will take longer to remedy. Consider how easy it would be to miss filing dates and lengthen audit processes. We live in the age of integrations, big data, and readily available mobile apps for anything, so why not global payroll too? Make your life easier by ensuring whatever solution you choose does not utilize manual data entry, or, at least minimizes it to the greatest possible extent. Multi-country payroll providers offer user-friendly systems that eliminate the need for spreadsheets and manual entry. And, integration with popular global human capital management systems (HCMs) is becoming the best-practice way to manage both payroll and HR data globally.

• Centralize Local and Global Tax Compliance Information

One of the most common pitfalls of multi-country operations is using different providers or solutions for each country. This may be manageable at 1-2 countries, but at 3+ it can feel like juggling. At the end of the day, whoever owns the global payroll needs access to clear and accurate information across all your countries, in one place, to ensure compliance is being met everywhere. Again, a multi-country payroll partner’s system can be the key to making monitoring compliance easy. But check to make sure your chosen partner’s system will enable you to see your compliance documents (filings, tax receipts, etc.) quickly and easily.

• Check Cross-border Compliance Too

Beyond local in-country taxation and regulation, the need to make sure you are doing things by-the-book in financial transactions and personal data handling across borders has never been greater – especially for companies doing business in the US and Europe. OFAC, FCPA, and EU Data Protection Directive are just a few of the major global compliance hurdles you will encounter. You must be aware of these important rules and oversight organizations so you can make sure your payroll process conforms. The penalties for non-compliance can be severe and can impair a business’s ability to operate, Fortunately, multi-country payroll providers are often several steps ahead of their clients in this area, and the good ones have structured their services to make sure your payrolls comply. Ask about global compliance when making your partner selection.

Beyond local in-country taxation and regulation, the need to make sure you are doing things by-the-book in financial transactions and personal data handling across borders has never been greater – especially for companies doing business in the US and Europe. OFAC, FCPA, and EU Data Protection Directive are just a few of the major global compliance hurdles you will encounter. You must be aware of these important rules and oversight organizations so you can make sure your payroll process conforms. The penalties for non-compliance can be severe and can impair a business’s ability to operate, Fortunately, multi-country payroll providers are often several steps ahead of their clients in this area, and the good ones have structured their services to make sure your payrolls comply. Ask about global compliance when making your partner selection.

• Have Real-Time Local Information Sources

Every country in the world’s compliance requirements are a moving target; rules are added or changed each year. Most first-world countries have relatively easy digestible sources of information like websites or handbooks to help you stay informed. But, this is not the case as you expand into less-developed jurisdictions. You need to find local experts you can trust and who will report changes in a timely fashion. In this survey by Deloitte, all companies put “managing changes in regulation/taxes” as the largest influencer of global tax compliance, with almost half putting it as the “top priority.” Here again, choosing a multi-country payroll provider can make tracking rule changes across the globe easy and manageable. They may have experts on staff as well as network partners in each country that are contracted to keep them and you in line with regulatory changes.

Every country in the world’s compliance requirements are a moving target; rules are added or changed each year. Most first-world countries have relatively easy digestible sources of information like websites or handbooks to help you stay informed. But, this is not the case as you expand into less-developed jurisdictions. You need to find local experts you can trust and who will report changes in a timely fashion. In this survey by Deloitte, all companies put “managing changes in regulation/taxes” as the largest influencer of global tax compliance, with almost half putting it as the “top priority.” Here again, choosing a multi-country payroll provider can make tracking rule changes across the globe easy and manageable. They may have experts on staff as well as network partners in each country that are contracted to keep them and you in line with regulatory changes.

• Have Reliable Translation Resources

In the same report by Deloitte quoted above, you will also note that quality assurance is the third highest rated issue in compliance. Quality is hard to control even when you understand the language and every detail of regulations; add a layer of translation, and the challenge increases exponentially. Some of the documents and interactions that will require translation are:

-Employment contracts
-Tax and compliance guidelines
-Local provider contracts
-Employee interactions
-Printed and online employee resources

If you think that translation services are a tiny niche industry, think again. According to a recent article in Forbes, it has surpassed $33 Billion in global volume, with Forbes calling it “the biggest industry you’ve never heard of.”

• Consider Treasury Management Services

Outsourcing the funding of your payrolls through treasury management is an easy way to kill more than two birds with one stone. By using a third party to make your payroll payments in your country of operation, you can easily execute currency exchange transactions, easily report in your domestic currency, and have the third party manage the stringent Office of Foreign Asset Control (OFAC) compliance requirements. Some companies (including Celergo) have a treasury management component built into their overall offering and even give a compliance guarantee when you utilize their treasury management service.

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Here at Celergo we are proud of our Compliance Guaranteed promise. If you are struggling with any of the issues listed above, or are looking to implement consolidated global payroll in any of the 150 countries we operate in, please contact us. We are happy to help!

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