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Global Employment Taxes

Overview

In recent years there has been an increase in the complexity of employment taxes and payroll functions for businesses operating globally. Common challenges include gaining visibility over employment taxes risk and compliance in numerous jurisdictions, and ensuring that there is sufficient skills and knowledge to manage this on an on-going basis.

It is now also common for a single service centre to encompass the HR, Payroll and Finance functions on a global or regional basis, making employment taxes compliance in any particular jurisdiction increasingly difficult to track and monitor. Deloitte’s Global Employment Taxes team provides advice to organisations helping them to improve compliance, address risk and manage cost and tax issues in the employment taxes space, across all jurisdictions in which the business operates.

Issues and trends

Changes in demographic - it has become common practice for payrolls to include internationally mobile employees which presents varying complexities. In addition, it is common that one individual in a business may be responsible for several or all overseas payrolls, making the task of identifying and managing compliance highly complex.

Complex remuneration - the change in typical remuneration packages means that employers regularly offer equity awards, deferred cash and complex termination packages. This combined with an often itinerant demographic means those responsible for employment taxes often need to know the impact of a wide range of remuneration offerings in a wide range of jurisdictions.

Cost control - employment taxes and related costs can be some of the most material costs to an organisation. Businesses are now thinking globally to achieve larger economies of scale and world-wide efficiencies (e.g. by structuring total reward with the benefit of supplier discounts and legitimate tax/social security efficiencies).

Outsourcing of payroll - businesses increasingly outsource payroll, rather than deal with it in house. Employers must ensure that the staff operating their payroll externally and those managing the process internally, possess the required skills and expertise; cost cannot be the only factor.

The risk agenda - legislative developments and increasingly penal cross-border tax authorities contribute to the challenges that the in house employment taxes function of global businesses face. Many businesses are increasingly concerned with how to effectively manage risk in respect of their employment taxes operations in all jurisdictions.  As well as the potential financial cost of rectifying compliance failures, businesses are also considering any potential reputational risks that compliance failures can sometimes present. Consequently employers are becoming more proactive in managing and mitigating these risks.

Harmonised global reward - increasingly businesses are looking to centralise or harmonise the provision of employee reward and benefits. There are various employment taxes implications to rolling out benefits and expenses plans across several jurisdictions. Tax and HR need to work together to ensure the success of new plans from an employee and a compliance perspective.

Our services/solutions

Deloitte offers a wide range of global employment taxes consulting services which can assist businesses to achieve high compliance levels, manage employment taxes risk and costs and maintain an effective working relationship with local tax authorities. Deloitte’s Global Employment Taxes team comprises a globally co-ordinated network of specialists with first-hand experience in advising large multi-national organisations across a breadth of issues. Our services include:

Payroll offerings
Deloitte provides a range of compliance and tax related services, both consulting and operational. We can assist global businesses over the entire lifecycle of payroll and tax compliance, providing a complete end-to-end service.

Risk reviews
Deloitte can determine global employment taxes compliance risks, support you in taking remedial action on a global or local basis as necessary, and negotiate with tax authorities to settle liabilities in relevant local jurisdictions. We can then partner with you as you remediate, helping you to prioritise and make improvements into the future.

Reward offerings
Deloitte provides a deep and broad selection of services around reviewing and structuring of global reward packages to ensure they are operating efficiently, maximising on tax savings and remain attractive to employees.

Technology services
Deloitte offers a toolkit of technology-based services to support employers in managing employment taxes compliance, globally.  These can be accessed via a shared online platform which provides a secure and single point of entry to all client users, tailored to each business’s needs.  Our technology services include:

  • Compliance Countdown is a web-based tool that has been developed to help businesses manage and monitor their compliance requirements across multiple jurisdictions, without disrupting existing processes and service provider arrangements.
  • GA Incentives is a web-based global tool that manages multi-jurisdictional tax and social security withholding calculations on equity award transactions. The tool supports most types of equity plans, and provides automated calculations for over 90 countries in real-time.
  • Country guides are interactive online documents which provide a high level overview of local employment taxes requirements in multiple jurisdictions. The guides are simple, accessible online, and regularly updated, and can help businesses keep up to date with their employer obligations in those locations.

Key contact

Related links

  • Employment Tax School

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