@BDO USA Tax · BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging...

BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)

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BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

BDO KNOWLEDGE Tax Webinar Series International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa) Ken Guilfoyle, Senior Director – Expatriate Tax Services, BDO USA, LLP Sony Martinez, Senior Manager – Expatriate Tax Services, BDO USA, LLP May 22, 2014


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CPE and Support CPE Participation Requirements ‒ To receive CPE credit for this webcast:

You’ll need to actively participate throughout the program. Be responsive to at least 75% of the participation pop-ups.

Certificate of Attendance: If you are logged in the entire time and respond to all participation pop-ups, you will be able to print your certificate from the “Participation” section at the end of the webcast. If you log out before printing your certificate:

BDO USA professionals ‒ CPE will automatically be issued in CPE Tracking & Reporting at the end of every week. A copy of your certificate will be sent after you have been issued credit.

All others will be emailed instructions on how to access your certificate.


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CPE and Support (cont’d) Group Participation ‒ To receive credit:

Sign-in sheets must list a Proctor name and CPA license number. BDO USA professionals ‒ Submit your sign-in sheets using a General Training & Development Request

in BDO Service Now found at: BDOWorld > Applications & Resources > BDO Service Now > Click “Service Catalog” in the left menu, then under Training & Development, “Make a Request”.

Clients and contacts ‒ Email sign-in sheets to [email protected] within 24 hours of the webcast. Alliance members ‒ Should proctor their own group participants. This process is detailed in the

LearnLive Participant Guide, which can be found by searching “LearnLive Participant Guide” on the Alliance Portal. Call LearnLive Support below for questions.

Unfortunately, we cannot currently support group CPE for International Firms. Those wanting CPE must register and log in on their own computer.

Q&A: Submit all questions using the Q&A feature on the lower right corner of the screen. At the end of the presentation, the presenter(s) will review and answer all questions submitted. Technical Support: If you should have technical issues, please contact LearnLive:

Click on the Live Chat icon under the Support tab, OR Call: 1-888-228-4088

mailto:[email protected]


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With You Today

Ken Guilfoyle Senior Director – Expatriate Tax Services BDO USA, LLP 50 West San Fernando Street Suite 200 San Jose, CA 95113 (408) 352-1932 [email protected]

Sony Martinez Senior Manager – Expatriate Tax Services BDO USA, LLP 100 Park Avenue New York, NY 10017 (212) 885-7476 [email protected]



https://bdoworld-dept.bdo.com/sites/BDSPortal/Headshot Library/Martinez, Sony.sts-expat sr mgr.NYC.jpg


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Objectives

Identify tax and global mobility issues for assignees and multinational employers in emerging markets

Recognize expatriate and international tax concepts

Recognize income and employment tax as well as compensation planning strategies

Understand BDO’s Global Expatriate and Mobility service offerings


Pre–assignment Tax Planning Challenge: Many countries do not have tax treaties with the United States


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China

China does have an income tax treaty with the U.S., but no totalization agreement.


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Latin America

Treaty countries:

Mexico

Venezuela

Non-treaty countries:

Argentina

Brazil

Chile - signed but not ratified


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Payroll Tricks and Traps – Latin America

Brazil: Type of visa determines payroll reporting

and withholding (lengthy process to obtain work permits – 6 months or more)

Must pay salary comparable to local peers when sending assignees into Brazil

Expatriates leaving have to stay on Brazil payroll to get benefits such as unemployment compensation (FGTS/INSS)

Have to be careful not to terminate employment in a secondment situation or employer will have to pay out

Other countries: Often have to stay on home country

payroll to continue pension contributions

Could be considered taxable income if employer makes contributions on employee’s behalf


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Africa

Treaty countries:

Egypt

South Africa

Tunisia

Non-treaty countries:

Angola

Ethiopia

Kenya

Nigeria


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Abundance of natural resources

30 – 90% of the world’s gold, platinum, copper, etc.

10% of the world’s oil reserves

60% of the world’s arable land


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Africa Hotspots - ?

Mozambique - Tete, Zambezi Valley - Coal

Tanzania & Mozambique – Mtwara & Rovuma - Gas

Uganda – Lake Albert – Oil, Infrastructure

& Industrial

Ghana – Oil, Mining & Commercial property

Southern Angola – Lobito – Iron Ore, Oil

Refinery

Angola – Cabinda & Soyo – Oil & Industry

South Sudan – Oil & Infrastructure

Namibia – Uranium

Botswana – Coal & Power

Guinea – Bauxite & Iron Ore

Southern Zambia – Kafue & Mumbwa – Iron Ore & Cement

Northern Kenya – Oil

Mozambique – Niassa Province – Coal

Central Africa – Iron Ore

Eastern DRC - Oil


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10 common mistakes made when operating in Africa

1. Lack of knowledge and planning

2. Lack of knowledge of business culture in host country

3. Unrealistic expectations

4. What type of business entity to setup

5. Minimum share capital

6. Local participation

7. Foreign exchange regulations

8. Direct and indirect taxation

9. Taxation of employees

10.Work permits


Pre–assignment Tax Planning Typical considerations


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Assignment Policy and Terms

Remain on U.S. payroll and entitled to U.S. benefits

Compensation package – what allowances will the employer pay the employee

Typical allowances – shipment of household goods, cost of living, housing, education

Tax reimbursement – tax equalization, tax protection, localization

Tax support – tax registration in foreign jurisdiction, tax return preparation assistance


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Tax Costs

What taxes are due – home and foreign jurisdiction

Income tax

Social tax

How much will the employer and employee pay in taxes – home and foreign jurisdiction

Double taxation due to lack of tax treaty


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For Example


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U.S. to Brazil: Scenario 1 Tax Costs

Equalized Gross-up Only

6% savings


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U.S. to Brazil: Scenario 2 Tax Costs

Equalized Non-Equalized

36% savings


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U.S. to China: Scenario 1 Tax Costs


33% savings


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U.S. to China: Scenario 2 Tax Costs


65% savings


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U.S. to South Africa: Scenario 1 Tax Costs


34% savings


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U.S. to South Africa: Scenario 2 Tax Costs


88% savings


Employee Presence and PE Issues


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China


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Chile


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Africa


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Africa - Nigeria


Human Resource and Compensation Planning Security, medical benefits, education, housing


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Concerns for International Assignees

Maintain home country compensation

Maintain home country benefits

Duplicate living costs

Family relocation/visits


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Intel: Medical Benefit and Education (2.5 billion investment in Dalian China)


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Security and Housing - Africa – Latin America

Nairobi 60,000 to 300,000 KES USD $675 to $3,400 Utilities 10,000 KES USD $115

Luanda USD $10,000 to $30,000 3-hour commutes to centre city A British Journalist of the Daily Mail found that a Hamburger costs $50 but an AK 47 costs $20

Sao Paulo USD $2,000 to $10,000 30-month lease


Cost Allocation, Transfer Pricing Currency controls


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Currency Controls

Countries with foreign exchange controls are also known as "Article 14 countries," after the provision in the International Monetary Fund agreement allowing exchange controls for transitional economies. These include:

Belize

Brazil

China

Egypt

Libya

Morocco

Namibia

Nigeria

South Africa

Sudan

Tunisia

Venezuela

Zimbabwe


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China – Circular 19 Transfer Pricing Implications

Example: What happens when the expat is 100% employed by the U.S. company?


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China – Putting it all together

Example: What happens when the expat is 100% employed by the U.S. company?


BDO in Africa, China and Latin America


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BDO Africa Desk - Footprint


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BDO Latin America - Footprint


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BDO China - Footprint


Questions


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Conclusion Thank you for your participation! Certificate Availability: If you participated the entire time and responded to at least 75% of the participation pop-ups, click the “Participation” button below to access the print certificate button.

Group Participation Reminder ‒ to receive credit: Sign-in sheets must list a Proctor name and CPA license number.

BDO USA professionals - submit your sign-in sheets using a Training & Development Request in BDO Service Now found at: BDOWorld > Applications & Resources > BDO Service Now > Click “Service Catalog” in the left menu, then under Training & Development, “Make a Request”.

Clients and Contacts – email sign-in sheets to [email protected] within 24 hours of the webcast.

Alliance Members ‒ should proctor their own group participants. This process is detailed in the LearnLive Participant Guide on Alliance Portal > Resource Center. Call LearnLive Support for questions at 1-888-228-4088.

Unfortunately, we cannot currently support group CPE for International Firms. Those wanting CPE must have registered and participated from their own computer.

Please exit the course by clicking on the red “X” in the upper right corner.



Speaker Biographies


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Biography Ken Guilfoyle

Ken Guilfoyle Senior Director – Expatriate Tax Services BDO USA, LLP 50 West San Fernando Street Suite 200 San Jose, CA 95113 (408) 352-1932 [email protected]

Kenneth Guilfoyle, CPA, GPHR, GMS-T has a master’s degree in International Business Administration from the University of South Carolina and joins BDO national expatriate services group, with over 21 years of professional experience including 10 years of expatriate practice experience in Tokyo Japan, London United Kingdom, and most recently Athens Greece. Ken knows firsthand the challenges faced by international assignees and employers.

Ken has worked both in industry and Big Four public accounting with Fortune 100 investment banks, insurance companies and international start ups. Ken’s strengths include relationship management, international business and strategic human resource management consulting.



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Biography Sony Martinez

Sony Martinez Senior Manager – Expatriate Tax Services BDO USA, LLP 100 Park Avenue New York, NY 10017 (212) 885-7476 [email protected]

Sony is a senior manager with the Expatriate Tax Services practice in our New York office. She is a Big 4 alumnus and has spent more than 12 years in the expatriate tax services practice. Sony started her career in expatriate tax services in Singapore where she resided for 3 years. While residing in Singapore, she worked in the US tax practice of a big 4 firm and paved the way for Sony to continue her Expatriate Tax career in the US. While in New York, Sony managed the global tax compliance engagement for a major pharmaceutical firm for 6 years. In her current role at BDO, Sony handles a diverse client base, from individual clients to multinational companies in various industries. Sony interacts on a day-to-day basis with her client’s program managers, and key client personnel in HR and Payroll. She helps them manage their expatriate population and the assignees’ global tax compliance, and address various issues that arise from sending their employees on global assignments.

Sony is a Licensed IRS Enrolled Agent.


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BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through 49 offices and more than 400 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multinational clients through a global network of 1,264 offices in 144 countries. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. www.bdo.com To ensure compliance with Treasury Department regulations, we wish to inform you that any tax advice that may be contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or applicable state or local tax or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein. Material discussed in this publication is meant to provide general information and should not be acted on without professional advice tailored to your individual needs. © 2014 BDO USA, LLP. All rights reserved. www.bdo.com

@BDO USA Tax · BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging...

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