With business being conducted across borders, organisations must also mobilise their human capital similarly. Mobility of the work-force is a significant task involving planning from various perspectives. Further, in addition to the planning, various compliances as prescribed under different laws must also be addressed.
Issues normally faced by multi-nationals in human resource mobility
Multi-national organisations usually face the following challenges on assignment of their expatriate employees across the globe:
- What laws must be complied with in the host country and how such laws will that be accomplished?
- What will be the cost to the company foremployee mobilisation, and how can such cost be optimised?
- What will be the tax implications for expatriate assignment both to the companies as well as the expatriates?
- Whether there will be any PE risks on employee assignment, including deciding on who will be the ‘economic employer’ and if yes, how these can be dealt with?
- Whether any exemptions under tax treaties can be claimed?
- Does the economic employer have to comply with social security contributions?Our team of experts assist clients in mobilisation of its human resources, by developing unique solutions customised to the needs of the clients in an efficient and law compliant manner. We provide a broad spectrum of services for assistance in all necessary compliances for the employer as well as the expatriate employees. An illustrative list of our services is as under:
- Planning and advisory in relation to assignment of employees to India before the expatriates’ arrival in India;
- Advising on assignment structure based on specific facts of a multi-national employer so that both the employer and the employees are compliant with Indian laws in an efficient matter;
- Handholding of employee from date of entry into India until completion of assignment;
- Addressing BEPS and PE risks for foreign companies in India on assignment of expatriate employees;
- Advisory on secondment agreements and cost re-charges for such secondments, both from withholding tax as well as transfer pricing perspectives;
- Advising on the compensation structure, ‘take-home’ pay of the employees and the prospective investments which may be undertaken by the employees for availing the tax benefits provided under law;
- Employee Stock Option structuring in a tax friendly manner both for the employers as well as employees and advising on necessary tax implications in relation to issuance of ESOPs;
- Advising on any exemptions / benefits that may be available under the Indian domestic tax law and/or the Double Taxation Avoidance Agreement;
- Advisory on eligibility of the employees for taking foreign tax credits and documentation required for claiming such tax credits from Indian income tax perspective.
- Assisting companies in applying for visas/work permits of their employees;
- Obtaining registrations/ approvals from immigration authorities;
- Determination of residential status of the expatriate and in the case of dual residency, advising on applicability of ‘tie-breaker rule’;
- Assisting clients on obtaining registrations both with the tax authorities and the social security authorities;
Monthly computations of withholding tax and social security contributions of employees so that cash flows of employers are optimised throughout the year;
- Filing of withholding tax returns with the tax authorities and social security returns with the concerned Social Security department authorities;
- Obtaining ‘No-objection certificates’ for the expatriate employees upon their departure from India;
- Other compliances as prescribed under various laws.
- Handling audits before the tax authorities in case the tax returns are picked for audit by the tax authorities;
- In case any variation to the returned income is made by tax authorities, assisting in representation and litigation before the various forums (such as Commissioner-Appeals, Tax Tribunals, High Courts, Supreme Court).