Today's business travelers are being tested on two fronts.
On the corporate side, they are facing cost-cutting initiatives, and as they
travel they are discovering that certain countries are aggressively looking for
additional sources of revenue. The result is a dramatically increased level of
complexity for corporate clients who, depending on the size and sophistication
of their international travel program, may be unaware of the risks their
company may have to confront.
Corporate cost-cutting has forced a reevaluation of
face-to-face meetings, and in many instances has replaced such interactions
with videoconferences and conference calls. However, to compete in a global
economy, businesses still need to grow internationally. To succeed, someone
from headquarters will need to visit foreign countries, whether to build sales,
train locals or establish corporate processes.
As the economy rebounds, companies now find themselves
poised to take advantage of new growth opportunities. This increase in overall
activity has triggered—and will continue to trigger—business travel.
This revival in business travel, however, is facing a new
challenge: cash-strapped countries looking for additional sources of revenue.
The result? Travelers may accidentally trip income tax, social tax and
immigration wires that endanger them and the company. These dedicated employees
unwittingly can become "accidental expatriates."
Business travelers only used to concern themselves with
their length of stay in any particular country. Authorities now also
investigate the type of work being conducted, revenue associated with that
activity and whether visits are being extended due to projects that go over the
expected deadline. One might wonder how they would find out The increasing
level of sophistication and coordination between customs, immigration and tax
authorities may surprise you.
This increase in regulatory changes, coupled with more
sophisticated tracking systems, has led to a growing number of audits by tax
and immigration authorities. Belgium, for example, uses LIMOSA, an advanced
registration system dedicated to tracking business travel longer than five
consecutive days in any given month. In the United Kingdom, tax authorities
conduct unannounced audits, reviewing company visitor logs and requiring
detailed explanations of the purpose of visits. In Canada, while the 183-day
rule may apply for triggering immigration and tax liabilities, if a string of
individuals enter the country for one project, their time in the country is
combined and put toward that threshold.
Booking international travel requires a greater level of due
diligence to ensure that either a centralized group within the company or a
third-party vendor ask questions about the nature of the visit, the work being
conducted and whether the proper documentation has been arranged. If a business
traveler becomes an accidental expatriate and creates that tax liability, it
gives local authorities the right to review that person's facts and
circumstances in coordination with applicable laws and treaties.
Companies have a lot at stake. For companies not large or
sophisticated enough to warrant creating a centralized global mobility team,
any entity that provides consolidated travel services can help coordinate
activities and provide companies with a snapshot of where everyone is at any
given time. It also can keeping historical records of where employees have
gone, how long they stayed and what they did.
The worst-case scenario would be to send a client abroad
only to have them turned away at immigration. You can avoid this type of error
by putting proper controls in place and establishing a way to communicate
expectations clearly.
This story originally
appeared in the August 9, 2010, edition of Business Travel News.