Staying on top of tax compliance requirements can be a daunting task for any business. Ensuring global payroll tax compliance becomes a critical challenge when employees are located in multiple jurisdictions.
Finding ways to streamline global payroll can help ensure that income, taxes, and payroll tax withholdings are reported and remitted appropriately, helping to protect corporate reputation and shareholder value.
Follow these tips to help ensure tax compliance for multi-jurisdictional payroll:
Payroll tax obligations can include any combination of federal, state, local, provincial, and regional income taxes depending on the countries and jurisdictions involved. Due dates can vary widely from one tax authority to the next.
Maintaining an up-to-date tax compliance calendar can mitigate the risks of missing a deadline and having to pay associated late fees and penalties.
Every organization operating in multiple countries or jurisdictions should have documented policies, procedures and internal controls covering payroll tax compliance. The tax authorities’ underlying rules, deadlines, and withholding requirements may change over time, so reviewing and adjusting internal policies and procedures is essential.
While responsibility for global payroll tax compliance policies may rest with the finance function, additional business functions, such as the human resources and legal department, should also play a role in confirming policies and procedures are reasonably designed to ensure compliance in the global locations where the organization employs workers.
When a foreign tax authority questions a company’s tax compliance, or when an organization is notified of an audit, cooperating fully with those government officials involved can help limit the potential investigatory scope and may help limit monetary fines and sanctions.
Relying solely on local accounting teams to handle global payroll tax compliance may inadvertently create additional risk for an organization; accountants whose experience is limited to domestic tax matters may lack the sophistication and resources necessary to understand and adhere to global tax regulatory requirements.
However, it can also be a mistake to rely on separate, siloed accounting solutions in each jurisdiction. Doing so is inefficient, at best.
Working with a global payroll tax provider can create efficiencies and help ensure compliance. Leveraging a global payroll solution also can give executives and shareholders confidence that, from a tax standpoint, the organization is poised to quickly and easily expand into new countries or territories.
If you operate in multiple jurisdictions, maintaining compliance with global tax requirements is not optional. To learn more about how a global payroll provider can help protect your organization and its shareholders, contact one of our global payroll experts.
With more than 12 years of experience and in-depth working knowledge of payroll tax requirements in more than 150 countries and jurisdictions, we have the resources you need to ensure compliance. Contact us today for more information.
**This article is for informational purposes only. It is not intended to constitute legal advice.