Sure, payroll taxes are not in scope of a travel manager’s job. But there is a great way for travel managers and TMCs to add real value here by being proactive with traveler data.
Many countries and other taxing jurisdictions are aggressively seeking more payroll taxes from business travelers. This means their pay could be docked for spending just one day in a foreign country on business.
This article reports that “more than 100 countries have joined The Global Forum on Transparency and Exchange of Information for Tax Purposes, which is working toward automated exchange of immigration reports, hotel stays and airline reservations. Better-informed enforcement bodies will have an easier time catching non-compliant firms and individuals.” (emphasis added)
The problem is not limited to international travel. In the US, many states have some form of traveler tax, according to this 2013 Pew report.
File this under “Being a proactive problem solver”. These traveler tax issues place the burden of proof on the employer. So travel managers should reach out to their payroll tax liability folks to discuss the types of travel data needed to manage these risks.
There is the historical travel angle, and the future travel angle. The key is to analyze each traveler’s location and duration history, and calculate how many days the traveler has until triggering some type of tax liability.
Complex? OMG, yes. Fortunately, there are at least two firms working specifically in this area. Blackspark uses TMC booking data and is integrated with Concur, while Monaeo uses the traveler’s mobile phone data.
The point is that there are automated ways to feed traveler data into the equation. This can keep travelers from triggering significant tax liabilities – and from refusing to travel for fear of losing more of their hard-earned pay.
TMCs, you should raise this issue with your clients. If you get enough traction, why not incorporate pre-trip alerts to help manage these future tax liabilities?
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