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The past two years have seen significant political upheavals across the globe, and one result has been a move by countries toward tightening of immigration controls and greater scrutiny of tax affairs. Indeed, international tax standards are also likely to change significantly in the years to come as countries start to adopt rules based on the OECD/G-20’s Base Erosion and Profit Sharing (BEPS) action plan, which was designed to ensure profits are taxed where the activity and value leading to those profits is created. When this is coupled with the impending EU General Data Protection Regulation (GDPR), which comes into effect in May 2018, the costs of getting compliance wrong, both financially and in terms of reputation, will never have been higher.
Of course, the immigration and tax challenges posed are nothing new to the global mobility professional. After all, immigration regimes across the world are always in a state of flux as nations try to strike a balance between the domestic pressure to protect the jobs of their own citizens and the need to either attract the best talent or fill particular skill gaps in the workforce. While low economic growth can spur governments to adopt wildly different tax approaches—sometimes cutting taxes in order to stimulate the economy, sometimes raising them to protect tax revenues—they are invariably accompanied by talk of ensuring that all parties, often with a special focus on big multinationals, are paying their fair share. For governments seeking to crack down on practices that they perceive to be harmful or that enable avoidance of tax, BEPS equips them with the rules and guidance to do just that, meanwhile increasing the risk of unwary companies unwittingly falling into noncompliance. While extra immigration and tax rules can be onerous, they aren’t anything that a global mobility team won’t have faced before; however, that doesn’t mean that there aren’t ways to improve on how these challenges are faced. Technology can play an important part in this.
On the other hand, and while data protection should always have been a concern, the GDPR presents companies with different problems, some of which may not have been considered before, especially those relating to personal data. Indeed, the GDPR represents the EU’s desire to redress the balance between companies and the personal data on individuals that they keep, with the ultimate aim being to change corporate culture and foster greater respect for privacy.
The GDPR applies to any organization keeping personal data on an EU resident, which means few multinationals operating international assignments will escape being covered by the new rules. The potential penalties for noncompliance under the GDPR reach the higher of 4 percent of a company’s global revenue or €20 million. In today’s technological age, however, the damage to a company’s reputation, should it suffer a major data privacy breach, could be even more serious than the “draconian” fines. Yet many organizations have been slow to respond to the impending legislation, with many even now admitting that they are unsure as to what the GDPR will mean for them. Where organizations have awakened to the challenges ahead, there has been a rush to secure existing systems and to introduce new data privacy policies and processes; when it comes to technology, “privacy by design” is now the overriding principle for all future development.
The GDPR is going to mandate a change in how global mobility teams view and treat the personal data they use, and it is going to impose more onerous strictures, but as with tax and immigration, technology can be used to mitigate the worst of these and ultimately to improve how the global mobility function operates with regard to data privacy.
Assignment management software is one technology that can play a key part in how an organization’s global mobility function responds to the challenges posed by ever-increasing compliance demands, and there are several functionalities that should be of interest to any global mobility professional.
Where are your assignees? It’s an obvious question, and yet one that even now not all companies can answer.
Assignment management software offers companies the opportunity to not only track the demographics of their assignment population, but also store immigration information and documentation, create alerts and reminders for when visas, work permits, or social security agreements need renewing, generate communications to various stakeholders, initiate external vendor operations, and kick off workflow processes.
Fundamentally, it is only once you know where your assignees are and what information you have on them—and perhaps more importantly, what information you don’t have—that you can start considering how you measure up with regard to compliance.
Many companies will have informal processes and practices already in place to try and ensure consistency of policy application, but often such processes are not enforced across the organization. Assignment management software allows companies to formalize these processes and bring rigor and discipline to how the global mobility function works regardless of where the user is based.
An effective workflow can ensure that immigration practices are complied with, and in a timely fashion. Given that one of the most frequent frustrations voiced by global mobility personnel is assignments being held up by immigration processes, the workflow can be used to identify bottlenecks and better tailor processes to the immigration timetables of different countries.
Workflow design can “bake” data privacy into everyday work processes, securing personal data, restricting access to it, and ensuring that users follow best practices. A clearly defined workflow can also support exception management, allowing companies to identify exceptions to policy and any potential areas of noncompliance that need addressing.
Workflows can be used to involve all necessary stakeholders, including those outside the global mobility function, such as assignees, senior management, and vendors, in an organization’s processes, ensuring that policy and best practices are applied in their dealings with global mobility.
Tax is a significant component of the cost of an assignment, and yet some companies are still happy to use rough estimates when it comes to predicting potential tax liabilities. Assignment management software gives users the ability to create more accurate tax estimates and to tailor them to an individual’s circumstances with a view to ensuring there are no ugly surprises with tax reconciliation at the end of the year, or indeed when the business compares actual costs of an assignment against what had been budgeted for.
Assignment management software can also be used to initiate, communicate, and manage the logistics of tax advising, reconciliations, and filings with your external tax providers to ensure that these vital actions are performed on time and in accordance with the necessary legislation.
Technology becoming commonplace in the working environment has not only brought a massive increase in the amount of data relating to assignments but also improved access to that data.
Indeed, with so much more information available and greater pressures on making that data count, the general trend with regard to assignment management software has been a moving away from simply reporting on the raw data to using more sophisticated analytics to allow for greater granularity of data, cutting across demographics, policy, costs, time periods, etc.
Of course, while ease of access to data and analytics can be viewed as positives from a business perspective, they also need to be viewed in the context of data privacy. This means reviewing who has access to the data, both directly and indirectly, and the channels used for disseminating the information, as well as providing the advanced data analytics required, assignment management software can incorporate roles and responsibility-based security to determine access and available functionality. Good data analytics design can ensure that personal data is not unnecessarily exposed.
As many global mobility professionals can relate to, greater adoption of technology has led to a proliferation of systems for various functions that can be hosted either in-house or by external providers. A recent trend has been to investigate the possibilities of creating interfaces and links among these systems.
It’s not hard to see the attraction of such interfaces. In addition to efficiencies from eliminating duplicated effort and reducing user errors—for example, when one system acts as “master” and shares its data with others—there are compliance benefits as well.
From a data privacy perspective, interfaces offer a more secure medium of data transfer than, say, email. They can eliminate unnecessary access to data being transferred, or indeed any access when it is not required.
Interfaces also can be used to improve communication with both internal and external stakeholders, such as third-party relocation service providers, and they can be used in conjunction with workflows to improve and streamline key compliance processes—for example, around immigration applications or tax filing.
Another benefit of assignment management software is the ability to give assignees far greater participation in and greater transparency about the processes that go into sending them on assignment. Intuitive portals allow for assignees to update their own information, view and download assignment documents, get information on company policies and the global mobility function, and make assignment-related requests to the business. Companies can make other third-party content available to assignees, such as country profiles and reports on immigration, tax, and labor law in the host country, with a view to improving assignee awareness and understanding of the compliance requirements associated with going on assignment.
Integration with workflows allows assignees to be tasked with certain actions when their participation is required to ensure that compliance processes are adhered to and in good time; automated alerts and reminders can be used to keep these processes on track where necessary.
There is no doubt that stricter compliance requirements and the introduction of the GDPR legislation should be a concern to all global mobility teams, but with sufficient planning and greater use of technology, they need not be feared. Indeed, it could be argued that, if handled correctly, these challenges could prove to be the impetus for companies to embrace new and better ways of working.
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