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
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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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.
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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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.
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BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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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]
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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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
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BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
Pre–assignment Tax Planning Challenge: Many countries do not have tax treaties with the United States
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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China
China does have an income tax treaty with the U.S., but no totalization agreement.
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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Latin America
Treaty countries:
Mexico
Venezuela
Non-treaty countries:
Argentina
Brazil
Chile - signed but not ratified
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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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
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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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
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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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
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BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
Pre–assignment Tax Planning Typical considerations
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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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
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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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
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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For Example
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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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
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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U.S. to China: Scenario 1 Tax Costs
Equalized Gross-up Only
33% savings
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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U.S. to China: Scenario 2 Tax Costs
Equalized Non-Equalized
65% savings
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U.S. to South Africa: Scenario 1 Tax Costs
Equalized Gross-up Only
34% savings
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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U.S. to South Africa: Scenario 2 Tax Costs
Equalized Non-Equalized
88% savings
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BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
Employee Presence and PE Issues
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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China
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Chile
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Africa
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Africa - Nigeria
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BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
Human Resource and Compensation Planning Security, medical benefits, education, housing
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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Concerns for International Assignees
Maintain home country compensation
Maintain home country benefits
Duplicate living costs
Family relocation/visits
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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Intel: Medical Benefit and Education (2.5 billion investment in Dalian China)
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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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
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BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
Cost Allocation, Transfer Pricing Currency controls
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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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
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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China – Circular 19 Transfer Pricing Implications
Example: What happens when the expat is 100% employed by the U.S. company?
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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China – Putting it all together
Example: What happens when the expat is 100% employed by the U.S. company?
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BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
BDO in Africa, China and Latin America
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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BDO Africa Desk - Footprint
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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BDO Latin America - Footprint
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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BDO China - Footprint
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BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
Questions
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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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.
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BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
Speaker Biographies
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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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.
BDO KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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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 KNOWLEDGE Tax Webinar Series ‒ International Assignment Issues in Emerging Markets/Developing Countries (China, Latin America, Africa)
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