2016 KPMG Global Mobility Forum · 9/26/2016 · — Charlene Quincey – US Immigration Practice...

17-19 October 2016Eden Roc Miami Beach Resort

2016 KPMG Global Mobility Forum

https://kpmgbrandcentral.brandwizard.net/app/asset/asset_search.aspx?catid=757&libid=2


Trending:#business travelers #employment tax #immigration

October, 2016

2016 KPMG Global Mobility Forum



3© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Agenda

01 Introductions

02 Establishing a business traveler program – a practical approach

03 Immigration issues – technical compliance vs. crunch time

04 International tax issues – individual and corporate concerns

05 US state-to-state issues – non-resident taxation and payroll concerns

06 Wrap-up/Q&A


With you today— Roger Koferl – Principal, Global Mobility Services, US

— Jill Hemphill – Partner, Compensation & Benefits, US

— Charlene Quincey – US Immigration Practice Leader, KPMG Law LLP, Canada

— Roop Vohra – Director, Global Mobility Services, UK

— Scott Schapiro – Principal, Employment Tax, US

“In the wake of the OECD's base erosion and profit-shifting project, tracking people and functions in extreme detail has become a central pillar of tax compliance, according to Christian Kaeser, global head of tax at Siemens.”

~Tax Analysts, September 26, 2016


Business traveler compliance – a perfect storm— Globally mobile workforces— Shift towards “short-term” assignments— Stealth assignees— Increased scrutiny by tax authorities, localities joining in— Focus by media— Complexity surrounding compliance issues

- Employee tracking- Payroll tax compliance- Social insurance issues- Corporate tax concerns

— “New” focus on corporate risk- Monetary- Reputational


Strategic Compliance

OperationalFinancial

What are the risks?

Undisclosed tax liabilityInterest, penalties & finesLost corporate tax deductionsIncorrect financial statements

Ownership of the processData accuracy and completenessSustainability/flexibility of processInternal and external supportTimely compliance

ReputationSafety and security of employeesFreedom of movementBusiness registration/licensing

ImmigrationCorporate taxIndividual income taxEmployment & social taxVAT


Practicalities – The hard questions

What drives risk?

- Volume- Biz model- Locations

- Type of traveler

Who to track?- Executives

- Customer facing- All

How?- In- or outsource

- Built or buy technology

- Duplicative process- Employee’s role

What?- Payroll withholding

- Tax returns- Tax policy

- Immigration- PE analysis

Timing?- “Big bang”

- Incremental, by population or

location- Forward only or

retro


Practicalities - Operations

Employee Demographics & Compensation- HRIS systems

- Payroll systems

Work Information- Staffing/resource management tools

- Managers- Employee

- Client billing systems

Travel Details- Time & attendance- Travel expenses- Calendar tools- Smartphones

Third-party analysis tools (tax & immigration

Outputs- Work permits/visa- Payroll calculations- Tax remittances- Communications- Tax returns- Collections


Establishing a business traveler program— Identifying the need for a business traveler program

- Issues that provide the impetus for developing a business traveler program- Attempting to identify/quantify the level of current exposure- Determining the “owner” of a business traveler program

— Developing a team- Stakeholders involved- Developing consensus- Need for an executive sponsor

— Policy- What issue(s) are we attempting to solve for?- How will our program fit within our current corporate culture? - Pre or Post tri p compliance- Willingness to stop or delay travel- Bearing the cost of compliance

— Determine the level of tax support provided to travelers— Determine the policy for dealing with double taxation/withholding issues


Establishing a business traveler program— Procedure

- Phased approach vs. full implementation— Certain employee groups (e.g., senior management only for pilot)— US domestic or global, not both at the same time

- Level of employee involvement- Collection of data

— Degree of accuracy/compliance vs. employee burden/cost/complexity— Pros and cons of various data sources

- Employees- Travel Services- Expense reports

— Sharing of information and local data privacy rules— Obstacles to be overcome

- Employee concerns/acceptance of program/training- Cost of compliance- Collection and reporting of compensation in multiple jurisdictions- Decisions regarding prior year non-compliance


Immigration & Employment Law — Current immigration issues and concerns

- Increased scrutiny on the business traveler- ESTA regulatory changes- Simeio and H-1B compliance - Increase in site visits and I-9 audits

— Dealing with desire to be compliant vs. time required to obtain required documentation- do you have an assessment protocol in place to receive quick assessments for your travelling employees before they travel?- for your foreign national population in the US, are you tracking movements around the US?- limiting activities to remain compliant with US Federal Immigration laws- are relevant stakeholders trained to ensure compliance in the workplace and work related travel?

— designing a program and working with professionals to ensure compliance— key to compliance is to be proactive


International Tax – Key Issues— Individual income tax issues

- Determining taxability— Resident and non-resident taxation

- Domestic legislation— Day counting rules (days of arrival & departure)— Country specific rules e.g. UK Appendix 4

— Application of income tax treaties- Day counting period – tax year concerned, 12-month period- Days threshold (e.g., “the 183 day rule”)- Effect of recharges, economic employer, “PE” of employing entity

- Practical concerns— Obtaining tax registration or tax payer ID number— Managing host country payroll reporting and withholding— Filing annual tax returns


Social Insurance – Key Issues— Social Insurance (i.e., Totalization) agreements

— Regularity of visits

— Activities – “productive” v. “non-productive” work

— Practical concerns

- Obtaining a certificate of coverage


Corporate Tax – Key Issues— Permanent Establishment Concerns

- Based on facts & circumstances— Time spent— Regularity of visits— Activities of individual employees

- “productive” v. “non-productive” work- Negotiating/signing contracts

— Location visited – company site, client site, other— Control & management of individual employees— Other factors


US state-to-state — State taxation of nonresidents

- Determining taxability— Application of reciprocity agreements— Withholding de minimis allowances— Activity exemptions— Telecommuting (convenience of the employer doctrine)

- Practical concerns— Tracking employee travel— Proper allocation of compensation to nonresident states— Potential financial impact

- Organization- Employees

— Impact on corporate culture- Local taxation impact


Nonresident withholding De minimis jurisdictions

HI States with de minimis rules or exceptions

States without de minimis rules or exceptions

States with no withholding provision

As of October 1, 2016

AK

DC

SD

MT

WA

OR

CA

NV

ID

UTCO

WY

AZ NM

NE

KS

OK

TX

MN

IA

MO

AR

LA

WI

IL

MI

IN OH

MS

KY

TN

AL GA

FL

SC

NC

VA

PA

WV

NY

ME

NH

MDDE

NJ

MARI

ND

Source: KPMG LLP Global Mobility Services

VT

CT


State withholding audit activity (Samples) — New York

- Fourteen day di minimis on base compensation, not applicable to equity compensation- Aggressive enforcement for almost a decade- Large assessments especially on allocation of equity compensation

— California- Aggressive since the mid-90s- No de minimis- San Francisco Payroll Expense Tax (being phased out)

— Connecticut- Enacted New York’s de minimis regulations as their own- January 1, 2016 revised di minimis (15 days, taxable day 16) to include retroactive withholding – will this

impact audit activity?— Increase in audit activity in states that border a state with no personal income taxes

- Massachusetts, Georgia, Louisiana etc.


Federal legislation— Mobile Workforce State Income Tax Simplification Act — 114th Congress: HR 2315/S.386

- Passed House 9/22/16- Still in Senate Finance committee

— Statutory Framework:- No state personal income tax on:

— “Wages or other remuneration,” earned by:- “Employee” performing “employment duties,” except by:

— Employee’s state of residence, or — State in which employee is “present” for more than 30 days

— No state withholding or reporting rules apply unless taxable- If taxable, rules apply as of commencement of employment duties- Does not address equity compensation, likely leaving that up to the states.


Federal Legislation (cont.)— Operating Rules— Employer’s duty to withhold: no penalties if:

- Reliance on employee’s annual determination of time— Unless knowledge of fraud or collusion— Regardless of presence of other employer records

- If “time and attendance system” is in place (at employer’s discretion), data from such system shall be used— Definitions

- “Day”— Preponderance rule but, if in resident state and nonresident state in same day it counts as a day in the

nonresident state— “In transit” time does not count

- “Employee”— Looks to state definition— Excludes athletes, entertainers and certain public figures

— Effective Date – January 1 of second year after enactment


Thank you

© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

The KPMG name and logo are registered trademarks or trademarks of KPMG International.

kpmg.com/socialmedia kpmg.com/app

2016 KPMG Global Mobility Forum · 9/26/2016 · — Charlene Quincey – US Immigration Practice...

Documents

Transcript of 2016 KPMG Global Mobility Forum · 9/26/2016 · — Charlene Quincey – US Immigration Practice...