Further evidence of the risk rating attached to international business travelers has been delivered in the EY Global Mobility Effectiveness Survey.
The survey investigated the gulf between the data available to mobility professionals, and the data needed to enable them to plan strategically, attitudes to corporate policies and their execution, and the areas of operational and regulatory interest to participants in the survey.
Results indicate that short-term business traveler issues have the highest mobility risk rating, with the top five risks given as:
1. Business traveler activity 2. Income tax reporting and withholding 3. Immigration compliance 4. Corporate tax e.g., permanent establishment and recharge 5. Social Security reporting and withholding
Ian Hopkinson, Partner at EY, commented:
“Many organizations rely on people traveling for short periods across borders. These business trips can create risks around immigration, corporate, employment and individual taxes, depending upon the journey locations, length of visits and activities undertaken. These risks are regulatory, reputational and financial and can also damage the ability to do business in some regimes. Yet many employers cannot track where people are and what they are doing. But there is an increasing number of sophisticated technological tools that can help.”
EY report that at the point of the survey, only 47% of survey respondents confirmed they had a policy in place to manage short-term business travellers, albeit a further 28% of respondents had recognised the risk and planned to implement a policy. When looking at individual industry sectors, financial services and petrochemicals reported significantly higher levels of preparedness at 90% and 81% respectively.
The potential risks generated by business travelers are many and varied - personal income tax, payroll withholdings, social security, immigration, employment law, corporate tax and the actual activity of the individual – which means there is no single solution which can be implemented to manage and mitigate these risks.
While the availability of data regarding traveler activity from expense systems, travel agent reports, and employee calendar information can help to identify risks, this is typically only after the assignment has taken place – and the challenge for mobility teams is to implement a more holistic approach to risk management and mitigation which combines data from both pre- and post- the assignment activity.