December 16, 2010 by MSI
Due to globalization,
international business travel has increased significantly over the past five
years. As a result, many companies are formalizing these business trips through
their international assignment policy. So, what qualifies and why should you
have a formal policy?
A typical extended business
traveler (EBT) is defined as an employee working abroad for more than 30 days,
but for less than 180 days. The number of days in the destination country within
the previous 12 months and the timing of an assignment are important issues, as
they may create tax and immigration compliance risks for the employer.
Typically, EBTs are used due
to specific business needs that develop unexpectedly. A manager may decide to
extend business trips for their employees and may be unaware of compliance
risks that result. With no formal policy and tracking system in place, the
employee goes unnoticed, until a problem arises. Problems that may arise from
these “stealth” employees can include: immigration officials detaining
employees, employee deportation or incarceration, unbudgeted business costs and
a blemished company reputation.
Extensive pre-planning and due
diligence can ensure compliance, while administering the program in the most
cost effective manner. Revising the international assignment policy to formalize
the EBT, as the company does with short-term and long term assignments, can
manage the corporate risk in the areas of: tax compliance to the employee and
company, reporting and withholding obligations, immigration requirements and
employee tracking.
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