As companies seek to expand into new territories to gain an edge over their rivals, compliance issues are moving up the agenda. Even before taking the plunge and committing resources to a new country or region, some basic homework can cut through the red tape.
Upon entering a new country, exposure to a new, and perhaps, complicated world awaits. And giving consideration to compliance issues at an early stage can pay dividends. Ignoring them, however, can result in your plan for expansion being buried under a mountain of paperwork and escalating costs.
Every country has its own economic and political regulations to control those seeking to take advantage of the available markets.
For instance, before an individual can enter a country, they must satisfy the appropriate immigration control officers that they are entitled to do so. In addition, gaining access to a country does not automatically give an individual clearance to work there.
Obtaining the appropriate visas and work permits is clearly essential to the success of any international assignment. So, giving some thought to the entry requirements to enable your international assignee to enter and perform productive work in the host country needs to be clarified before they even set foot on the plane.
Having your employee phone you from the airport having been refused entry to the host country is not good PR and will make any future assignees think twice before signing up for an overseas posting.
At the same time, employers need to be aware of any tax and social security issues, painful though that may be.
Many employers have taken the view that, as their employee remains employed through a UK company, no exposure exists in the host country. However, the tax and social security issues can be considerable and often result in an unexpected, and very unwelcome, local tax and social security bill.
Take the following example: An employee is sent to country Y for a year to set up the business there. Potentially, the very presence of an employee in country Y can create a corporate entity in that country. That being so, does the company need to incorporate in that country? Are accounts required? Is withholding tax required on the employee’s salary? Is local social security payable?
The UK has agreements with many countries regarding the payment of tax and social security and a little advance thought can, in many cases, alleviate potential problems.
All these issues need to be considered before an employer sets foot in the host country.
Proper planning at the initial stage will not only pave the way for the initial entry into the country, but will benefit the company when sending more employees to the same location.
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