A recent Mercer survey has established that up to 25% of expatriates have faced fines or penalties as a result of inaccurately reporting their income.
The Mercer Global Mobility Compliance Issues Survey, conducted in August this year, found that the management of global mobility programs posed a major challenge for employers, many of whom struggled to track their employees’ income and subsequently faced major issues with tax audits.
The survey, which was conducted in 240 companies throughout the USA and Canada, analyzed the ways in which companies with a global workforce managed compliance and reporting requirements.
Geoffrey W. Latta, Mercer Partner, discussed the survey in a press release: “The growth in recent years of extended international business travel has only exacerbated the difficulties faced by employers in tracking income,” he said, “as well as meeting both home- and host-country tax and immigration laws.”
Further findings of the survey revealed that respondents felt that there were insufficient procedures in place for operationally managing business travelers. Fewer than 50% of those surveyed did not fully track the movement of their employees and 59% admitted that they lacked a policy that prescribed how employees and expatriates should track their own travel.
On a positive note, 67% of those surveyed did have a compliance procedure that detailed expat employee’s responsibilities for reporting travel and adhering to tax reporting requirements. 14% of these companies also refuse to pay expense claims or living allowances unless such policies are fully adhered to:
“Some employers do try to enforce a level of monitoring in order to minimize their own risk of not being compliant with government requirements,” said Geoffrey Latta, “Noncompliance by expatriates with respect to accurate and timely income reporting puts an employer at risk.
“In serious cases, the company faces potential fines, a tarnished image in the public arena and difficulties with the host-country government – unwelcome headaches for a company striving to balance the needs of management and expatriate families.”