The majority (88%) of respondents said they are concerned that extended business travelers (EBTs) – employees working abroad more than 30 days but less than 180 days – create a compliance risk for the company, citing tax risks (93%) and immigration risks (75%) as the top areas for concern, KPMG said in a news release.
Only 50% of the companies surveyed have a compliance framework in place for short-term assignments (STAs) – international assignments that are longer than six months but less than 12 months, the news release said. Almost a third (31%) of respondents do not track the length of time employees are on s STA.
The compliance issues are likely to increase as many companies say that they will be using short-term assignments more frequently in the future, KPMG said. EBTs are used by 93% of those surveyed, and 31% said the use of EBTs will likely increase over the next 18 months. Similarly, 91% of respondents said they use STAs, with 38% noting that they are likely to use STAs more frequently in the future.
“While we knew that companies faced compliance issues around short term international assignments, we were not expecting that so many companies had identified risks but were still not taking steps to effectively manage those risks,” said Ben Garfunkel, national partner in charge of KPMG LLP’s International Executive Services (IES) practice, in the news release.
Garfunkel noted that a third of the survey’s respondents said their company has already experienced tax or immigration compliance issues related to STAs or EBTs. This can result in penalties and risks to the company’s repuation, as well as deportation and jailing of employees.
KPMG’s Extended Business Traveler-Short Term Assignment Survey was based on an electronic survey of 160 corporate HR and tax executives conducted from June 28 – July 27, 2007.