Firms find it hard to manage tax affairs of mobile employees

PwC survey shows a third of companies do not know number of staff working globally

Many businesses face an increasing challenge in managing the tax affairs of their mobile employees, according to a new survey by PwC.

The OECD’s Base Erosion and Project Shifting (BEPS) project has sharpened the focus on the risks posed by employee mobility, as it aims to ensure profits are taxed in the territory where business activity is performed, according to PwC. However, an international survey by the firm found that nearly a third of companies did not know the exact number of their employees working internationally.

While more than half (58 per cent) of companies surveyed were aware that the BEPS recommendations had significant implications for mobility and their tax position, they were unsure how best to deal with the challenges. The majority recognise the need to make changes and would like to do so before the rule changes are enacted, according to PwC.

The “informally mobile population” (business travellers, cross-border commuters and international virtual workers) pose particular challenges and risks to employers, PwC says. Almost a quarter (23 per cent) of respondents do not know who has responsibility for business travellers and only a third of companies feel that their tax and mobility teams work closely together to monitor this.


Global work

Some six out of 10 of the companies already have already made, or recognise the need to make, changes to the way they manage mobility to ensure they are ready to comply with the OECD’s action BEPS project

"Global work is increasing sharply and, with the many international businesses in Ireland, as people move in more fluid and informal ways, it creates complex mobility challenges for their employers," said Mary O'Hara, tax partner with PwC. " Companies must develop an understanding of who their mobile people are, where they are going and what they are doing, to be best placed to identify the risks. "

She said organisations in Ireland and around the world were coming under increasing scrutiny from tax authorities, and the financial and reputational risks of falling foul of international tax legislation “can be punishing”.

PwC’s Managing Mobility in a World Reshaped by BEPS is an in-depth study of 224 professionals from organisations around the world. The survey was carried out between July and September 2016. The participants come from a representative cross-section of business types, industry sectors, sizes and global headquartered locations.