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has started worldwide implementation of independent traveler-tracking system Voyage
Manager—but not as a security tool, the purpose for which it was created.
Instead, Xerox is using U.K.-based Voyage Manager for tax and immigration
compliance by monitoring how many days employees spend in foreign countries. It
is deploying Voyage Manager internally and reselling it to clients of its Xerox
Relocation and Assignment Services division.
tax planning is not top of mind for most travel managers, yet even the briefest
international business trips technically can make travelers liable for Pay As You
Earn-type taxes incurred in foreign countries if visits are for internal
company purposes. Longer periods spent in a country—regardless of the reason—also
can render employees liable. Companies also must track how many days employees
spend in a country to ensure they meet visa requirements.
director for taxation Chris Gibson offered the following explanation of Pay As
You Earn taxation and its underlying connection to travel: Under PAYE
principles, employees pay income tax in the country where they work, so,
technically, if an executive works abroad for a week, they are tax-liable in
the country they are visiting for that week. Since this principle almost would
be impossible to implement in practice, many countries operate bilateral tax
treaties through which they agree not to tax each other's citizens for visits
up to a specified duration—typically 183 days in any given tax year.
such treaties work on the principle that a host office does not pay for a
visiting employee's travel expenses or other costs for which the host office
might claim tax relief, and that the traveling employee's home office not
internally charge the host office for that employee's services. Some countries
therefore require companies to monitor international trips to ensure compliance
with these complicated rules.
such rules have been in place for many years, experts in tax, travel and
immigration told BTN that national
governments are clamping down harder on noncompliance, thus pushing mobility risk
issues up the agenda in many corporations. In October, the technology company
Infosys reached a $34 million settlement with the U.S. Department of Justice
for sending Indian citizens to the United States on visas deemed inappropriate
countries struggle for revenue, they are tending to crack down more" on
tax issues, said Kelly West, vice president and COO for Xerox Relocation and
Assignment Services. A client brought its PAYE concerns to her attention 18
months ago, "and since then we've had more and more customers saying it's
a problem," West said.
Pearl, CEO of San Francisco-based law firm Pearl Law Group, concurred and cited
an improved ability of immigration authorities to track arrivals and departures
through machine-readable passports. "Almost every corporate immigration
conference I have been invited to over the past two years, they want to talk
about traveler tracking," said Pearl.
listed the United Kingdom, Ireland, Belgium and Australia as countries where
tax authorities have become tougher in auditing requirements to track employees'
overseas visits. "It's a global issue," said Gibson. "Tax
authorities are now much keener to ensure they are collecting the right amount
of tax. It is very easy for them to challenge companies which don't put
controls in place. The challenge is for companies to ensure they are providing
debate is about what constitutes sufficient data and which is the most reliable
method for collecting details on traveler movements. Gibson has seen companies
resort to processes as rudimentary as checking visitor books in their office lobbies.
Others ask employees to fill in online calendars; the Big Four accounting firms
all offer calendar-based systems, according to Pearl. "Two of the Big Four
have systems I feel are pretty strong because they are built into their
workflow, but that means you have to buy their services," she said. "A
simple tax calendar is not good enough."
approach is to use data from travel bookings, as is common for security
purposes. Spurred on by customer demand, Xerox approached Voyage Manager, even
though the travel tracking tool provider never significantly had promoted the
compliance-monitoring aspects of its product.
Manager managing director John Scott told BTN
the system sources employee location data from four main channels. The first is
travel reservations data, which it can collect through global distribution
system-based travel management company sources in the usual way. Alternatively,
it can integrate mobile itinerary data from Concur's TripIt and Carlson
Wagonlit Travel's WorldMate. Another option is for travelers to send simple
texts to Voyage Manager, such as their flight number, or a message that their
flight has been cancelled. That information is parsed automatically into the
location source for Voyage Manager is mobile device "polling." Voyage
Manager sends an automated request to mobile data networks, which send back
data packets indicating the country in which a device is located. However,
Scott said polling is not possible for phones obtained in the United States.
channel is global positioning system tracking of a smartphone or a dedicated
tracking device for travelers in high-risk countries. And the fourth is a
manual option that allows travelers to enter details themselves or override
information entered automatically into the system.
described tracking systems based solely on GDS booking data as "a good
starting point" but not wholly adequate. He pointed to numerous potential gaps,
including scenarios in which companies use multiple TMCs or travelers book
outside authorized channels. There also is the potential for inaccuracy, especially
when travelers divert from their booked itinerary or make journeys that are not
recorded through a TMC—for example flying to one country and then driving from
there to another.
has followed up on Xerox's interest by developing a dedicated module for tax
and visa compliance tracking. It provides manual overrides for travelers plus
summary reports of how long travelers have spent in a country and the purpose
of their trips. It also can be programmed to deliver automated warnings if
travelers approach thresholds that would trigger tax liability or visa changes.
spite of Voyage Manager's additional features, HRG's Gibson is confident that
TMC-only data plus a policy requiring travelers to use official booking
channels is sufficient to demonstrate a company's effort to be tax-compliant. "Tax
authorities don't expect you to be 100 percent perfect," he said.
that "no system is going to give you 100 percent," Pearl said, "GPS
is the way to go hypothetically but, because of privacy laws, companies are not
comfortable requiring employees to do this, although within a few years, in the
U.S. at least, it is rumored that certain states are going to start GPS tracking
for tax purposes."
what meets tax authorities' expectations today, Pearl said that "it's an
emerging field. You need to make a good faith argument that you are working to
comply with the rules. Sourcing booking records and requiring employees to use
your TMC goes a long way, but if my company had a lot of people driving on
business trips or using different TMCs, I would be telling them to use
something like TripIt."
advice to travel managers is that they initiate dialogue with their organization's
tax team to foster better internal understanding of the nexus between tax and
travel. "Travel managers often receive requests from their tax team for
data without understanding the purpose," he said. "Tax managers will
be very interested in getting what help they can from travel managers, but don't
wait for them to come to you because they may not even be aware of the help you
can give them."
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