Reviewing Overseas Secondments And Compliances For A Multinational Corporation

Expat Orbit reviewed overseas secondments and underlying compliances for a leading multinational corporation and realigned local secondment programs to comply with the group's global mobility policies

Expat Orbit redesigned the secondment programs and rewrote the secondment agreements to ensure that the group's global mobility policy was strictly followed. The team also analysed ongoing tax compliance, applied hypothetical tax and equalisation strategies, examined applicable tax treaties, and amended tax positions, saving INR 4 million in total

Reviewing Global Mobility Policies

Analysing Applicable Tax Treaties

Reviewed Historic Tax Compliances

Analysing Prevailing Secondment Practices

Restructuring Home and Host Payroll

Introduced Hypothetical Tax and Equalization Policies

Client Challenge

To manage overseas projects, the client frequently deputes its employees to the group entities, particularly in the APAC region. The client approached Expat Orbit for review in order to realign local secondment practises with the group's international mobility policies and to assess the accuracy of tax compliances performed on behalf of the expatriate employees

Key Challenges

Secondment structures not aligned with Group’s mobility policy

During the secondment term, home withholding continued

Double taxation at home and host location

Secondment agreements, compensation and benefits required review

Parallel withholding carried out in the host country

Expats reported assignment income in host as well as home country

After having the aforementioned practises and structure in place for a few years, the client requested the redrafting of intercompany and secondment agreements, the assessment of additional tax outflow, and the establishment of procedures and practises to ensure compliance accuracy and optimal tax outflow in future assignments

Our Solution

Expat Orbit took a holistic approach, analysing and streamlining compliances wherever possible, availing tax treaty relief, implementing corrective measures to ensure tax cost optimization, and, most importantly, establishing practises and tools for future secondments, ensuring strict adherence to the group's mobility policies

Analysis:

A thorough analysis is required for an effective solution. The team thoroughly reviewed various secondment policies, agreements, tax positions, payroll and withholding tax compliances being carried out for expatriate employees

Reassessment:

Drawing interpretations from domestic tax laws, judicial precedents, and tax treaty with the respective host country, the team reassessed the tax liability for expatriate employees

Home Withholding and Foreign Tax Credit:

Depending on expat’s tax residency, recommendations were made for judicious discontinuance of home tax withholding along with availment of the foreign tax credit wherever applicable

Hypothetical Tax and Equalisation:

In sync with the group’s global mobility policy and considering that expatriate employees were equalized on the assignment income, the team introduced payroll withholding of hypothetical tax and social security

Secondment Letters and Assignment Compensation:

The team redrafted secondment contracts and letters based on assignment duration, applicable policy, and the cost of living index in the host city. Establish procedures, templates, and tools for calculating assignment entitlements, compensation, and benefits

Expat Orbit redesigned our secondment programmes and redrafted the secondment agreements to ensure compliance with the organisation’s mobility strategy. They restructured home and host payrolls and implemented policies around hypothetical taxes and equalisation. With their assistance, our overall assignment costs were optimised, and excess tax outflows were minimized. Over the past three years, Expat Orbit has supported our mobility initiatives and compliances with high efficiency.

Senior Vice President, HR

Leap13

Expat Orbit Advantage

The review helped the client in three ways.

They reviewed, updated, and brought their secondment structure, practises, and documents in line with global policies
The overall assignment cost was optimised, dual tax outflow was minimised, and wherever applicable, tax treaty relief was availed
The home and host payrolls were restructured, and policies around hypothetical taxes and equalisation were implemented