Effective planning for international employees - tax, social security, immigration 18 November 2013...
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Transcript of Effective planning for international employees - tax, social security, immigration 18 November 2013...
Effective planning for international employees - tax, social security, immigration
www.pwcias.com
18 November 2013
Monica XuSenior ManagerPwC International Assignment Services - Hong Kong
PwC
Agenda
1. An overview of key issues surrounding international assignees
2. Individual income tax
3. Social security & immigration
4. Possible planning tactics
5. Q&A
2
PwC
Key issues surrounding international assignees
3
International assignees
Individualtax
Corporate tax
Social securityImmigration
Labour requirement
PwC
International assignees
• Business travellers – meetings, marketing, etc.
• Short- term assignees – projects, trainings, etc.
• Long-term assignees – executives, management
• Internal firm services – internal audits, IT Support, trainers, etc.
• Roles – regional functions
5
PwC
De minimis threshold under domestic laws
• Mainland China 90 days
• Hong Kong 60 days
• India 90 days
• Singapore 60 days
• Malaysia 60 days
• Australia 0 day
• Japan 0 day
• Thailand 0 day
• Indonesia 0 day
• Vietnam 0 day
6
PwC
Protection under income tax treaty
The following conditions must be satisfied for exemption of employment income in other contracting parties:
1. Presence ≤ 183 days in the other contracting party in a calendar year / any 12-month period; and
2. Remuneration is paid by, or on behalf of, an employer who is not a resident in the other contracting party; and
3. Remuneration is not borne by a permanent establishment (PE) [or a fixed base] which the employer has in the other contracting party; and
4. Remuneration is taxable in the contracting party according to the laws in that party.
7
PwC
Common questions
• Individuals:
- Who is tracking? “Who knows I am here?”
- What income is taxable?
- Double taxation?
- Tax filing requirements?
• Employers:
- Who is here?
- Cost charges?
- Withholding/ payroll taxes?
9
PwC
Risks and exposures
• Individuals:
- Non-compliance: tax and immigration
- Financial penalties
- Inconveniences
• Employers:
- Corporate income tax and immigration exposure
- Financial penalties
- Unexpected/ unbudgeted costs
- Reputational
10
PwC
Social security requirement
• Hong Kong: Mandatory provident fundExemption criteria
• China: social security Law enacted in July 2011
12
PwC 13
Social security - China
Who can be exempted?
How much is the monthly
contribution?
Are there any refund upon departure?
What are the types of
contributions ?Who need to participate?
Is it fully implemented?
What if the employer pays for my contributions?
PwC
Permanent establishment
creation
Impacts of immigration
14
Deportation
Refusal of entry
Significant delays at point of entry
Non compliance with tax reporting
obligations
Non compliance with social security
obligations
Business disruptionNon compliance
with regulatory obligations
PwC
Immigration update - China
15
Z visa
F visaF visa
For exchanges, visits, inspections, etc.
M visa
Z visa
R visa
S visa
For business or commercial purposes
Dependent visa
Work visaHigh-level foreign experts who are in urgent need
Employers• Monetary penalty of RMB10,000 per
illegal worker (up to RMB100,000)• Confiscation of relevant income
Employees• Monetary penalty of RMB5,000 to
RMB20,000• Detention from 5 to 15 days plus penalty• Repatriation to home country and
prohibited from entering PRC for 10 year (for serious offences)
PwC
Best practices in immigration
• Centralised immigration policies
• Ensuring holistic stance
• Immigration governance structure with visible board level input
• Awareness to anticipate immigration changes
• Short term business visitor tracking
• Crisis management planning
16
Best Practic
e compliance
solutions
Sustainable business
growth
PwC
Planning strategies and considerations
Bonus, equity compensation, deferred compensation
Onshore and offshore roles and responsibilities
• Potential challenges from the tax authorities
• Compliance registration fulfillment
Tax efficient remuneratio
n items (e.g.,
housing)
• Whether supporting policy and documentation are in place
• Whether companies are exercising proper control over the policy
• The eligibility for income exemption or time apportionment claim
• The way to mitigate double taxation
Possible planning tactics
Slide 18
PwC
Business commuter policy
Key messages
19
Proper planning
Effective tracking system
Individual and corporate tax cost estimatesCommunicate
internally and externally
Stay ahead of the changing regulatory requirements
Timely tax and other regulatory compliance
Thank you.
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC International Assignment Services Holdings Pte Ltd, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
© 2013 PwC International Assignment Services Holdings Pte Ltd. All rights reserved. In this document, “PwC” refers to PwC International Assignment Services Holdings Pte Ltd which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.