January 30, 2020
Many companies are moving away from long-term overseas placements in favour of short-term transfers, a report has suggested. To reduce costs and meet changing business and worker needs, firms are shifting from typical transfers of one to three years to moves of around three to 12 months, KPMG International‘s latest Global Assignment Policies and Practices (GAPP) survey says. Although this shift allows organisations more flexibility, they must implement the necessary processes to remain compliant with immigration and tax rules, the report warns.
The analysis suggests that in the next five years, the overall number of staff members working overseas will remain largely unchanged. However, 75 percent of the 275 companies surveyed expect to rely on short-term placements and 56 percent on extended business trips to deploy their staff overseas. Furthermore, half expect to reduce the use of traditional long-term assignments, which often involve comprehensive tax, immigration and payroll reporting compliance. There is also a significant amount of employee-related administration to consider to help ensure a smooth transition and employee satisfaction. This includes logistical support for relocating employees and their family members, such as arranging the shipment of household and personal goods, assisting in home finding, identifying international schooling options and local transport, and familiarising the person with daily life.
Half of businesses expect to reduce the use of traditional long-term assignments, which often involve comprehensive tax, immigration and payroll reporting compliance.
KPMG believes businesses are opting to send staff on short-term deployments to avoid these costs and administrative burdens. Respondents cited income tax (31 percent) and immigration (26 percent) as the two main risks when relocating personnel but the report points out that shorter moves still create a risk of non-compliance.
Belinda Wright, Partner and National Leader of Immigration Services, KPMG Australia, commented: “For large businesses, violating immigration and tax policies on a larger scale generates the potential for catastrophic reputational risk, yet risks are still not being managed appropriately. The global immigration landscape has changed and businesses must take a more holistic approach, examining the reputational damage of their mobility actions with as much gravitas as traditional risk functions.”
The report also identifies a trend towards organisations having a standalone “global mobility” function to support the logistical and compliance requirements created by overseas moves. More than a third (38 percent) of those organisations surveyed have a dedicated global mobility team. Increasingly, these organisations are offering opportunities to work abroad as part of their recruitment, retention and employee development initiatives.
Image by Rudy and Peter Skitterians