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Mobility and Tax Changing Practices

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Mobility and Tax Changing Practices

2nd August 2022

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Xpatweb hosted a South African first full-day Global Mobility conference on 30 June 2022, the purpose of the conference was to discuss the current landscape of immigration and mobility in South Africa and the wider African market. 

During the discussion, it became clear that, the dichotomy for business between flexible mobility and the need to comply with tax in multiple countries may be one of the factors in non-compliance. 

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Changes to the way we work are happening faster than ever before and businesses need to keep up to survive. A new model is emerging, where staff with critical skills may be based anywhere in the world. This pressure to mobilise employees increases the challenge of managing fast-changing government requirements in areas such as tax, social security, and immigration law. Our experienced team has global reach and can ensure both employer and employee remain compliant. 

In an increasingly globalised world, companies need to have access to the right people at the right time, wherever they are in the world. These days, having a global footprint can often mean moving the task to the worker rather than moving the worker to the task. This flexibility is key to success but achieving it means overcoming the complexity of managing teams in multiple locations.

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Since the Covid pandemic, the mobility landscape has changed immensely where the following trends have been identified:  

  • On average companies have repatriated 1/3 staff temporarily/permanent during the pandemic.
  • Technology systems helped companies weather the storm better – it has been a lifeline during the pandemic to assist business to continue as normal.
  • There is an increased need to track whereabouts of expats – this further impacts compliance for tax, social security & payroll.
  • Most organisations have realized the need to changes mobility programmes, policies and processes.
  • A drive in the mobility sphere towards automation, expatriates have worked remotely but costs in the spotlight with the need to be reduced significantly.
  • There has been a reduction in assignment numbers, but this is starting to regain some traction.
  • Assignment numbers will take time to recover.

Key highlights include incorporating a Mobility Cost Calculator with technology as a focus being the forefront:

  • Costs are a key focus, and most mobility professionals are looking at ways at cutting costs.
  • Mobility Cost Calculator is pivotal to determine reasonable cost estimates of an assignee for informed decision-making purposes.
  • This calculator may include the following key components:
    • Employee Salary Build Up Calculation
    • Employer Total Assignment Cost
    • Tax Gross Up & Social Security Contributions

Recently, we noticed fundamental changes to business treatment of mobile workers, thanks to the increasing ability to work remotely, ease of travel, and pressure to save costs. While, traditionally, businesses were prepared to second senior employees to another country for a long-term assignment, this type of package is now being reconsidered.

The ease and changing nature of specifically business travel is a predominant mobility issue. Companies need to incorporate business travel management in their definition of mobility. Any business seeking to be at the forefront of talent-mobility alignment can’t afford to think of tax and immigration in isolation. Those that manage these issues in tandem, while continuing to monitor and adjust their global mobility footprint — putting the right people in the right place — are those positioning themselves for success.

Written by Zainab Bouziane, Africa Lead and Global Desk Expatriate Solution Specialist at Xpatweb

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