Posted: 2008-12-17 23:57 Tax Issues - expatriates  Presenter: Kerry Watkin Guest(s): Shohana Latchminarain - Click here to listen to the interview Summit TV speaks to Shohana Latchminarain from BDO Spencer Steward about how a company expatriate tax policy should be set up Kerry Watkin: Welcome to Tax Issues. Last week we discussed the tax implications of expatriate assignments - this week we’re looking at the corresponding tax policies. Shohana, what is a tax policy and how does it work for expats? Shohana Latchminarain: Generally as you know if an individual is going on assignment to a foreign country the first question would obviously be what are my taxes going to be like? Often we find where there’s huge expat populations moving around within organisations they generally tend to set a specific tax policy - so they might have a specific policy for individuals going on a short term assignment where the individuals take care of their own taxes, or the policy might be that the company takes care of taxes in the host as well as the home country and that typically is referred to as tax equalisation. We see this more and more as a global trend in the market - where companies tend to tax equalise individuals so they receive guaranteed net salaries and the last thing to worry about when going on assignment is obviously the tax burden. Kerry Watkin: What is the current trend for international assignments, globally? Shohana Latchminarain: The current trend is to equalise. Equalisation is typically where the individual enters into an arrangement where the employer agrees to give the individual a guaranteed net home-based salary - and on top of that assignment benefits and allowances. What that simply does from an employer’s point of view is that it simplifies the administrative burden, as well as giving the individual peace of mind knowing their net earnings at the end is obviously going to be as it would have been should they have remained in their home country. From an employer’s perspective it also encourages mobility - so obviously we see the trend is to equalise individuals that go on long-term assignments, and specifically for organisations with huge expat populations. Kerry Watkin: For this specific type of policy what are the benefits and disadvantages? Shohana Latchminarain: I’ve touched briefly on that - but as I said from an employee’s point of view it gives peace of mind and ensures the individual is not worse off than if they remained at their home location. The only disadvantage for the individual is if they’re going to a low tax rate jurisdiction they don’t get the benefit of the lower tax rate in the host location - for instance if they’re going from South Africa to an African country where the tax rate might be 25% they don’t score the 15% difference between the 25% rate versus 40% in South Africa. www.TAXtalk.co.za www.summit.co.za Transcripts: 082 962 2772 das/met Comments Related to this transcript: Comment on this transcript... Name : Email : Comments :