Borders business travelers

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Most global organizations recognize the raft of potential tax and other exposures that their short-term international travelers can unwittingly create. But few companies have summoned the courage to turn over the rock and deal with what they find there.

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Borders business travelers

  1. 1. INTERNATIONAL EXECUTIVE SERVICESThinkingBeyond Borderskpmg.com
  2. 2. © 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swissentity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  3. 3. ContentsMapping out systems formanaging employee travel 2KPMG International Executive Services Argentina 8 Mexico 116Australia 12 Montenegro 121Austria 15 Netherlands 124Belgium 18 New Zealand 127Bosnia and Herzegovina 21 Norway 130Brazil 24 Panama 133Bulgaria 29 Papua New Guinea 136Canada 32 Peru 139China 38 Philippines 142Colombia 41 Poland 145Costa Rica 46 Portugal 148Croatia 51 Puerto Rico 151Czech Republic 54 Romania 154Denmark 57 Russia 157Dominican Republic 60 Saudi Arabia 161Egypt 63 Serbia 164Fiji 66 Singapore 167Finland 69 Slovakia 170France 72 South Africa 173Germany 75 South Korea 176Greece 78 Spain 179Hong Kong 82 Sri Lanka 182Hungary 85 Sweden 185India 88 Switzerland 188Indonesia 92 Taiwan 191Ireland 95 Thailand 194Italy 98 Turkey 197Jamaica 101 United Kingdom 200Japan 104 United States of America 203Luxembourg 107 Uruguay 209Macau 110 Vietnam 212Malaysia 113 © 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  4. 4. Mapping out systems for managing employee travel2 / THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS 2 / THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS© 20112011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client servicesis a Swiss © KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and and is a Swissentity with with which the independent member firms of the KPMG network are affiliated. 23943NSS entity which the independent member firms of the KPMG network are affiliated. 23943NSS
  5. 5. Most global organizations recognize the raft of potential tax and other exposures that their short-term international travelers can unwittingly create. But few companies have summoned the courage to turn over the rock and deal with what they find there. The past few years have seen rising awareness of business travel-related non-compliance with tax and immigration laws among companies and government authorities alike. While governments see potential to boost tax revenues by targeting short-term travelers, global companies can be overwhelmed by the complexity and scope of the problem. Few organizations have company-wide systems for managing employee travel. Those that have such systems typically set them up in the wake of a major audit or dispute. By that time, the organization could have already suffered severe fines, penalties, and administrative costs — not to mention potential reputational damage in the eyes of the tax and immigration authorities, shareholders, and other stakeholders. A more proactive approach to employee business travel can help a company gain control and plan effectively to reduce related risks and costs. Business travel — more employees, more trips In many countries featured in this publication, the profile of the typical business traveler continues to change in ways that increase the employer’s related risk. Foreign postings are less likely to involve moving executives, their families, and their belongings to other countries for terms of a year or longer. Short-term business travel is on the rise as organizations globalize, work grows more project- oriented, and two-income families become the norm. By creating virtual project teams and moving talent around the globe as needed, employers can respond to global business opportunities more quickly. Many employees are happier to work on global projects by commuting or sojourning briefly in other countries without changing residences or uprooting their families. Having more employees travel more frequently for shorter periods can be more productive and less costly than traditional, longer-term relocations — but only to the extent higher tax and other costs in the host locations do not erode the gains and travel related expenses. The risk of higher costs, described in the sidebar, rises exponentially with the number of short-term trips taken. THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS / 3© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  6. 6. Keeping employees safe In addition to the trend toward commuting and shorter A World of Exposure sojourns, events of the last year highlight the importance Short-term international business travel is vital for of having a robust system in place for tracking and exchanging ideas and getting employees to work planning employee travel. Political unrest and natural together in global teams. But unmonitored and disasters such as volcanoes, earthquakes, and tidal unplanned, such travel can create a host of income waves: emergencies like these can strike without tax and other exposures. warning, creating a need to move employees out of the danger zone for uncertain lengths of time or marooning • Depending on how many days the employee spends them in a foreign country for longer than intended. working in a foreign country—in aggregate and often over more than one year—the travel could create Despite the underlying reasons, such moves can cause income tax and social security obligations for the the same tax exposures as other employee travel. In employee in that country. fact, these situations could entail even more risk, for example, when the relocation of key decision-makers • The extent of an employee’s travel in a country could from one country to another constitutes a shift in trigger income tax, social security, payroll tax and/ business functions with transfer pricing or permanent or withholding obligations for the employer and the establishment implications. When such events occur, employee. quick access to data about your employees’ whereabouts • Employees entering a country on business without and options for relocating them safely and economically the right immigration documents — or staying in the could be crucial. country for longer than the documents allow — could expose themselves and their employers to fines, Real-time monitoring and advance planning penalties and future travel restrictions. Clearly, today’s global organizations need to be ready to do more than respond after-the-fact to compliance obligations • An employee’s activities in a foreign country, such as created by a mobile workforce. Companies need to have concluding contracts on the employer’s behalf, could systems in place to monitor employee travel in real-time be construed as creating a permanent establishment and eliminate exposures before they occur. there, opening the company to taxation as a resident in that country. In developing a company-wide approach to managing • The employee’s services in the foreign country could employee travel, the first step is to determine who have indirect tax implications (e.g., by creating VAT should take ownership. Given the range of issues that remittance or collection obligations or nexus for employee travel can produce, companies often have purposes of business taxes imposed). difficulty knowing who is accountable. Responsibility for • Cross-border charges between related companies for managing employee travel issues spreads across many the services of business travelers should comply with parts of the business, with different aspects coming transfer pricing policies in the relevant jurisdiction in under the purview of human resources, tax, finance, order to avoid adverse tax assessments. information technology, and the travelers themselves. Proper planning that takes into account domestic Once a chain of accountability is established for laws, administrative policies, and potential tax treaty overseeing the various elements, companies can institute relief can help a company manage and mitigate such a global process for tracking and managing employee exposures before the employee heads out. travel. The next step is to put in place centralized, automated procedures and mechanisms, as described the sidebar, to help ensure the process is followed.4 / THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swissentity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  7. 7. Short-term travel under sharper scrutinyCompanies are well advised to gain control over theirbusiness travel management without delay. As noted, Getting the World by the Tailshort-term business travel and the potential for non- In the ideal case, all employees of a globalcompliance have caught the eye of governments seeking organization would have a central mechanism forto increase tax revenues. Around the world, enforcement assessing future business trips and helping mitigateactivities in the area are growing more intense. tax compliance and other risks before any travel canTax and other authorities are not only applying the be booked. Such a system would:rules more strictly, they are also improving their • quantify how much time the employee has alreadymethods for detecting non-compliance. National spent in a foreign jurisdiction in the past and howinitiatives to heighten border security over the last much more time he or she can spend there withoutdecade have taught agencies within governments becoming a tax residentthe benefits of collaboration. Now governmentdepartments are sharing information more frequently, • break down tax residence guidance at both nationalfor example, as customs, immigration and tax and subnational (e.g., state or local) levelsauthorities work together more closely to fulfill their • enumerate any social security, payroll tax, and/ormandates. Travel-related tax assessments, fines and withholding tax implications that could arise frompenalties are increasing as a result. extended business travel in the proposed host country • advise whether the employee’s planned activities (e.g.,Global travel policies and central systems are key meeting suppliers, attending conferences, negotiating sales) could have permanent establishment or otherIn this publication, we provide a high-level overview consequences in the foreign jurisdictionof the taxes and other considerations in countries • specify what visas or other immigration documentsaround the world. To plan for and manage short-term are required by business travelers in the foreigntravel effectively, however, companies need a means to countryintegrate this information with the particulars of their • list any other requirements or obligations that shouldemployees’ business trips. be taken into account by people traveling to theInstituting global travel policies and a central system to particular country.manage them can do more than help an organization Such systems should also track employees onavoid running afoul of the rules summarized in the international assignments in the event that naturalfollowing pages. Sound policies supported by a robust disasters or political developments make it necessarysystem can demonstrate good governance and foster to find and relocate them quickly.goodwill with tax and other authorities, help preparefor emergencies by providing an economical means tofind and move employees to safety, and provide data tohelp the organization analyze the costs and benefits ofemployee travel programs. THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS / 5 © 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  8. 8. 6 / THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swissentity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  9. 9. KPMG’s International Executive Services Argentina Mexico Australia Montenegro Austria Netherlands Belgium New Zealand Bosnia and Herzegovina Norway Brazil Panama Bulgaria Papua New Guinea Canada Peru China Philippines Colombia Poland Costa Rica Portugal Croatia Puerto Rico Czech Republic Romania Denmark Russia Dominican Republic Saudi Arabia Egypt Serbia Fiji Singapore Finland Slovakia France South Africa Germany South Korea Greece Spain Hong Kong Sri Lanka Hungary Sweden India Switzerland Indonesia Taiwan Ireland Thailand Italy Turkey Jamaica United Kingdom Japan United States Luxembourg Uruguay Macau Vietnam Malaysia THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS / 7 © 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  10. 10. ArgentinaIntroduction Contact Rodolfo P Canese Mendez . Adriana LaurinoA person’s liability to Argentinean tax is KPMG in Argentina KPMG in Argentinadetermined by residence status for taxation Partner Partnerpurposes and the source of income derived by T: +54 11 4316 5869 T: +54 11 4316 5784 E: rcanese@kpmg.com.ar E: alaurino@kpmg.com.arthat individual. Income tax is levied at progressiverates on an individual’s taxable income for theyear, which is calculated by subtracting allowabledeductions from the total assessable income,with the exception of foreigners who are in thecountry for less than six months; foreigners whoare in the country for less than six months areassessed tax at a flat rate.Key messagesExtended business travelers are likely to be taxedon employment income relating to their Argentineanworkdays.8 / THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swissentity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  11. 11. Income tax Tax rates For 2010, net taxable income is taxed at graduated ratesLiability for income tax ranging from 9 percent to 35 percent for both residents andA person’s liability to Argentinean tax is determined by nonresidents. The maximum tax rate is currently 35 percentresidence status. A person can be a resident, a nonresident on income earned over 120,000 Argentine pesos (ARS).on a ”permanent” basis, or a nonresident for Argentinean Foreign beneficiaries may be subject to a flat rate if incometax purposes (foreign beneficiary). tax is withheld at the source (see the section on employeeIndividuals are considered to be resident in Argentina when: compliance obligations and employer reporting and withholding requirements).• They are of Argentinean nationality, whether by birth or naturalization, except for those individuals who have lost their residence status. Social security Liability for social security• They are foreign individuals who have become permanent Argentinean nationals and expatriates living in Argentina residents of Argentina (and have a permanent visa) or are subject to social security contributions. Social security who are not residents but have spent sufficient time in contribution exemption is granted on request for foreigners Argentina during a 12-month period. on short-term assignment (less than two years).Generally, individuals who have been resident in Argentina Currently, social security taxes represent 17 percent ofwill lose their residence status when they acquire gross wages. Since March 2011, a monthly cap amountpermanent residence in another country or remain in of ARS13,879.25 has been applicable to the employees’another country for 12 months or more. contributions; employers’ contributions are not capped.The 1998 law also established a new category of individuals In accordance with the laws currently in force, the cap iswho are considered to be nonresidents present in Argentina updated every March and September.on a permanent basis. For example, foreign individuals whose Summary of the applicable rates and taxable bases forpresence in Argentina is based on the grounds of employment salaried personsthat is duly accredited and requires their permanency in Employer (I) Employer (II) EmployeeArgentina for a period not exceeding five years are considered (Percent) (Percent) (Percent)to be nonresidents. The same treatment applies to familymembers who accompany them. Pension fund 10.17* 12.71* 11.00***The general rule is that people who are residents of Argentina Pensioner’s 1.50* 1.62* 3.00***are assessable on their worldwide income. Nonresidents are Healthcare Fundgenerally assessable on income derived directly or indirectly Family Allowance 4.44* 5.56*from sources in Argentina. Extended business travelers are Fundlikely to be considered nonresidents of Argentina for tax Unemployment 0.89* 1.11*purposes or foreign beneficiaries. FundDefinition of source Medical Care 6.00** 6.00** 3.00***Employment income is generally treated as being Total 23.00 27.00 17.00Argentinean-sourced compensation where the individual Source: KPMG in Argentina, June 2010performs the services while physically located in Argentina. Notes:Tax trigger points (I) mployers for manufacturing, commercial, and service activities, ETechnically, there is no threshold/minimum number of days invoicing less than ARS48 million a year.that exempts the employee from the requirements to file and (II) ommercial and service activities invoicing more than ARS48 million Cpay tax in Argentina. To the extent that the individual qualifies a year.for relief in terms of the dependent personal services article Additional information:of the applicable double tax treaty, there will be no tax liability. *These percentages apply to the total remuneration without any limit.The treaty exemption will not apply if the Argentinean entity **These percentages apply, without any limit, to the total remunerationis the individual’s economic employer. since November 2008.Types of taxable income ***These percentages apply to the total remuneration or to the monthly limit of ARS13,879.25 (taxable salary, called ”MOPRE”)For extended business travelers, the type of income that is since March 2011.generally taxed is employment income. THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS / 9 © 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  12. 12. Argentina has entered into formal social security totalization There are two kinds of visas: temporary resident andagreements to prevent double taxation and allow cooperation permanent resident.between Argentina and overseas tax authorities in enforcing Temporary residenttheir respective tax laws: A temporary visa (Residencia Temporaria) provides – Bilateral treaties: Spain, Portugal, Italy, Chile, Greece permission for an individual to stay in the country on a – Multilateral treaties: Uruguay, Paraguay, Brazil nonpermanent basis to develop certain activities. This visa is granted for one year and can be renewed every year. Once they – Ibero-American treaty: Argentina, Bolivia, Brazil, Colombia, have arrived in Argentina, individuals and their employers can Costa Rica, Chile, Ecuador, El Salvador, Spain, Paraguay, proceed in making arrangements to obtain their DNI (personal Peru, Portugal, Uruguay, Venezuela. The Convention will ID card in Argentina). come into force and effect on the first day of the month following the date when the deposit of the seventh Permanent resident instrument of ratification, acceptance, approval, or joining A permanent visa provides permission for an individual to was made. However, this action will affect the relationship stay in the country indefinitely. between said states once the Implementation Agreement Once they have arrived in Argentina, individuals and their is signed by said states. The deposit of the seventh employers can proceed in making arrangements to obtain instrument of ratification to the SEGIB made by Bolivia in their DNI (personal ID card in Argentina), Argentine driver’s February 2011 implies that its coming into force will be license, and tax registration. in May 2011. The visas for residency and work are not differentiated inCompliance obligations Argentina. Therefore, if the individual’s spouse or dependantsEmployee compliance obligations receive visas, they will also be able to work in the country.The deadline for filing individual income tax returns and paying Double taxation treatiesany annual tax due depends on the final digit of the taxpayer’s In addition to Argentina’s domestic arrangements thattax board registration number and usually ranges from April 15 provide relief from international double taxation, Argentinato April 20 following the tax year-end, which is December 31. has entered into double taxation treaties with approximatelyIndividuals whose only source of income is employment 18 countries to prevent double taxation and allow cooperationincome, which may often be the case with extended between Argentina and overseas tax authorities in enforcingbusiness travelers, do not need to file tax returns if the their respective tax laws.income was subject to withholding at the source unless their Permanent establishment implicationsannual gross income exceeds a minimum that is set by the There is the potential that a permanent establishment couldArgentine tax authorities (currently set at ARS144,000), be created as a result of extended business travel, but thisin which case it becomes mandatory. would depend on the type of services performed and theFor many types of income, including any income other than level of authority the employee has.employment income paid to a nonresident, the payer must Indirect taxeswithhold tax at the source and remit taxes withheld to the The standard rate of VAT is 21 percent. VAT or IVA (impuestotax authorities. al valor agregado in Spanish) is a general tax onEmployer reporting and withholding requirements consumption within the Argentine territory. It is levied on theWithholdings from employment income are covered delivery of goods or the rendering of services by any personunder the Pay-As-You-Go (PAYG) system. If an individual is or legal entity conducting an economic activity and on thetaxable with respect to employment income, the employer importation of goods and services.has a PAYG withholding requirement. Foreigners who are VAT is levied on:present in Argentina for less than six months are subject to awithholding rate of 24.5 percent on their gross compensation. • The sale by VAT taxpayers of movable property located in ArgentinaOther • Work, leasing, and services specified in the law, providedWork permit/visa requirements they are performed in ArgentinaForeign nationals generally must obtain visas at Argentine • The final importation of movable propertyconsulates in order to enter Argentina. A waiver of the visa • The use or exploitation in Argentina of services that arerequirement is available to nationals of most developed supplied by nonresidents (i.e., import of services)countries if a trip is brief and for tourism or nonemploymentbusiness purposes. Executives coming to Argentina forthe purpose of engaging in employment must obtain a visa(prior to departure) with the Argentine migratory authoritiesthrough the Argentine company that will act as their employerduring the assignment.10 / THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swissentity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  13. 13. Employment income is not subject to VAT. Transfer pricingFor VAT purposes, the concept of taxable “sale” includes: Argentina has a transfer pricing regime that applies to transactions made with foreign affiliates and other entities.• Sales and other transfers for consideration of movable More details can be found in Argentine Tax Office Law 20.628 property located in Argentina (payment in kind, allocation and relevant amendments, as well as in Decree 1344/98 and of property on the liquidation of a company, contribution to General Resolution No. 1122/01. a company) A transfer pricing implication could arise to the extent that• The incorporation of movable goods produced by the the employee is being paid by an entity in one jurisdiction but taxpayer in the case of leasing and rendering of exempt performing services for the benefit of the entity in another services or those excluded from taxation jurisdiction, in other words, when a cross-border benefit is• Transfers of movable goods that are attached to the soil being provided. This would also be dependent on the nature at the time of the transfer, provided they have their own and complexity of the services performed. Forms F742 and individuality and represent goods in trade for the taxpayer F743 require disclosure of related-party transactions with foreign entities. Management fees can be deductible but must• The removal of movable property by the owner for personal meet an arm’s-length standard and be directly related to the use or consumption income being generated, and the relevant documentation• Transactions carried out by commission agents, must be kept. consignees, and others who sell or buy personal property Local data privacy requirements in their own name but on behalf of third parties Argentina has data privacy laws, including the Law for theUnder the VAT system, tax is levied at each stage of the Protection of Personal Data enacted in 2000 and the relatedmanufacturing and distribution process on a noncumulative regulations enacted in 2001. The laws are enforced by thebasis. The accumulation of tax is avoided through the National Data Protection Commissioner. The Europeandeduction of VAT invoiced to an entity. The entity pays VAT on Union (EU) has determined that Argentina’s laws meet thethe total amount invoiced by it in each monthly tax period, EU’s”adequacy” standard for data flows outside Argentina.but is entitled to recover the input VAT that was invoiced to Exchange controlthe entity during the same period. Exchange houses and banks trade foreign currencies freely.If, in any tax period, the credit for input VAT is higher than A visitor would be well advised, however, to travel with U.S.the amount of VAT due on output, the entity is not entitled dollars in Argentina, as these are exchangeable and are oftento a refund (unless the refund is related to exports). In cases accepted directly as payment.where there is an excess, it is credited against future VAT Nondeductible costs for assigneesliabilities. Nondeductible costs for assignees include contributions byIf a business manufactures taxable supplies in Argentina, an employer to non-Argentinean pension funds and medicalit will be required to register and account for Argentine VAT. insurance premiums.Note that under Argentine VAT legislation, it is not possiblefor a non-Argentine entity to register voluntarily in Argentinaand act as an”Argentine established entity. VAT must be filed ”on a monthly basis. THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS / 11 © 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  14. 14. AustraliaIntroduction Contact Andy HuttResidents are taxed on worldwide income whereas nonresidents KPMG in Australiaand temporary residents are generally taxed on Australian- Tax Partnersourced income only. T: +61 2 9335 8655 E: ahutt@kpmg.com.auA person’s liability to Australian tax is determined by residencestatus for taxation purposes and the source of income derivedby that individual. Income tax is levied at progressive rates on anindividual’s taxable income for the year, which is calculated bysubtracting allowable deductions from the total assessable income.Key messagesExtended business travelers are likely to be taxed on employment income relating to their Australian workdays.12 / THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swissentity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  15. 15. Income tax In January 2011, the Australian government proposed theLiability for income tax introduction of a one-year levy to help fund the rebuildingA person’s liability to Australian tax is determined by as a result of the recent floods. If introduced, an additionalresidence status. A person can be a resident, nonresident, 0.5 percent will be payable on taxable income betweenor temporary resident for Australian tax purposes. AUD50,000 and AUD100,000, and 1 percent on taxable income in excess of AUD100,000. Those affected by theA resident of Australia generally refers to an individual who floods or those with taxable income of less than AUD50,000enters Australia with the intention of remaining for more than will not be liable.six months (or who actually spends more than six months inAustralia during an income year). A temporary resident is a Social securityresident of Australia who is in Australia on a specific temporary Liability for social securityvisa and meets other prescribed conditions. A nonresident Superannuation is a mechanism requiring individuals toof Australia is generally someone who spends less than save money for retirement. It prescribes that employerssix months in Australia. The general rule is that a person who is make a contribution of 9 percent of earnings (up to aa resident of Australia is assessable on worldwide income. maximum contribution of AUD3,799.80 per quarter) into anNonresidents are assessed on income derived directly or Australian superannuation account. An exemption from theindirectly from sources in Australia (subject to the interaction superannuation requirement can apply for certain seniorof a double tax agreement). Temporary residents are executives or where there is a totalization agreementassessed on employment income from all sources derived between Australia and the home country.after arrival in Australia and all Australian-sourced investment Medicare Levy is payable only by residents and temporaryincome (subject to the interaction of a double tax agreement). residents from countries that have reciprocal healthExtended business travelers are likely to be considered agreements with Australia. The Medicare Levy rate isnonresidents of Australia for tax purposes unless they enter 1.5 percent of taxable income. The Medicare Levy SurchargeAustralia with the intention to remain in Australia for more may also be payable depending on the employees’ level ofthan six months. income and whether the employee has appropriate privateDefinition of source health insurance. If applied, the Medicare Levy SurchargeEmployment income is generally treated as Australian- rate is 1 percent of the total of taxable income plus reportablesourced compensation where the individual performs the fringe benefits.services while physically located in Australia. Nonresidents are not liable for the Medicare Levy orTax trigger points Medicare Levy Surcharge.Technically, there is no threshold/minimum number of days Foreigners may be exempt from superannuation. The Medicarethat exempts the employee from the requirements to file and Levy and Medicare Levy Surcharge may be payable.pay tax in Australia. To the extent that the individual qualifiesfor relief in terms of the dependent personal services articleof the applicable double tax treaty, there will be no tax liability. Compliance obligations Employee compliance obligationsThe treaty exemption will not apply if the Australian entity is Tax returns are due by October 31 following the tax year-the individual’s economic employer. end, which is June 30. Where a tax agent is used, thereFringe benefits tax is levied on the employer. The maximum is an automatic extension. Tax returns must be filed bytax rate is 45 percent. nonresidents who derive any Australian-sourced income (other than Australian dividend income, interest income,Types of taxable income or royalties, which are subject to final withholding tax).For extended business travelers, the types of income thatare generally taxed are employment income and Australian- For many types of income, including any income other thansourced income and gains from taxable Australian assets employment income paid to a nonresident, the payer must(such as real estate). Fringe benefits, which are broadly withhold tax at the source and remit taxes withheld to the taxnoncash employment income, are subject to fringe benefits authorities.tax, which is levied on the employer. Employer reporting and withholding requirementsTax rates Withholdings from employment income are covered underNet taxable income is taxed at graduated rates ranging from the Pay-As-You-Go (PAYG) system. If an individual is taxable15 percent to 45 percent. Nonresidents are subject to tax with respect to employment income, the payer has a PAYGat 29 percent on the first 37,000 Australian dollars (AUD) of withholding requirement. Where the payer is a nonresident,income and graduated rates ranging from 30 percent to this may be varied to zero by application to the Australian Tax45 percent for the remaining income. The maximum tax rate Office (with the liability arising on lodgment of the return).is currently 45 percent on income earned over AUD180,000 in In addition, employers may be liable to payroll tax at a statethe case of both residents and nonresidents. level where the annual payroll exceeds certain threshold levels and an exemption does not apply. Rates, thresholds, and exemptions vary between states. THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS / 13 © 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  16. 16. Other services for the benefit of the entity in another jurisdiction,Work permit/visa requirements in other words, when a cross-border benefit is beingThe appropriate visa must be applied for before the individual provided. This would also be dependent on the nature andenters Australia. The type of visa required will depend on the complexity of the services performed.purpose of the individual’s entry into Australia. Local data privacy requirementsDouble taxation treaties Australia has data privacy laws.Australia has an extensive tax treaty network. Exchange controlIn addition to Australia’s domestic arrangements that provide Australia does not restrict the flow of Australian or foreignrelief from international double taxation, Australia has entered currency into or out of the country. However, certaininto double taxation treaties with more than 40 countries reporting obligations are imposed to control tax evasionto prevent double taxation and allow cooperation between and money laundering. New legislation requires financialAustralia and overseas tax authorities in enforcing their institutions and other cash dealers to give notificationrespective tax laws. of cash transactions over AUD10,000, suspicious cash transactions, and certain international telegraphic or otherPermanent establishment implications electronic funds transfers (there is no minimum amount).There is the potential that a permanent establishment could All currency transfers (in Australian or foreign currency)be created as a result of extended business travel, but this made by any person into or out of Australia of AUD10,000would be dependent on the type of services performed and or more in value must be reported.the level of authority the employee has. Nondeductible costs for assigneesIndirect taxes Nondeductible costs for assignees include contributions byGoods and services tax (GST) is applicable at 10 percent on an employer to non-Australian pension funds.taxable supplies. GST registration may be required in somecircumstances.Transfer pricingAustralia has a transfer pricing regime. A transfer pricingimplication could arise to the extent that the employee isbeing paid by an entity in one jurisdiction but performing14 / THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swissentity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  17. 17. AustriaIntroduction Contact Hans ZoechlingA person’s liability to Austrian tax is determined by residence status KPMG in Austriafor taxation purposes and the source of income derived by that Partnerindividual. Income tax is levied at progressive rates on an individual’s T: +43 1 31 332 259 E: hzoechling@kpmg.attaxable income for the year, which is calculated by subtractingallowable deductions from the total assessable income.Key messagesExtended business travelers are likely to be taxed on employment income relating to their Austrian workdays. THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS / 15 © 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  18. 18. Income tax For the assessment of an individual who is subject to limitedLiability for income tax tax liability in Austria, the amount of EUR9,000 is addedA person’s liability to Austrian tax is determined by residence automatically by the tax authorities to the taxable income instatus. A person has unlimited liability to taxation (is a “tax order to reduce the tax-free amount to EUR2,000.resident”) if that person’s residence (that is, any home readilyavailable for the resident’s use) or habitual place of abode Social security(which is automatically assigned once the stay exceeds Liability for social securitysix months) is in Austria. The general rule is that such a person The Austrian social insurance scheme, which is a statutoryis assessable on worldwide income. If neither of these system, includes insurance for health, accident, unemployment,conditions is fulfilled, the person has only limited liability and pension. In principle, employment in Austria is the criterionto taxation (is a “nonresident”) in Austria, in other words, for being included. As a result, Austrian nationals and othersis generally assessable only on income derived directly working within the territory of Austria are treated equally.or indirectly from sources in Austria. Extended business The contributions consist of an employee’s element and antravelers are likely to be considered nonresidents of Austria employer’s element: The employee’s element amounts tofor tax purposes unless they enter Austria with the intention 18.07 percent. This rate applies for regular payments (thoseto remain in Austria on a permanent basis. that recur every month, such as the monthly base salary).Definition of source In addition, there is a maximum contribution basis ofEmployment income is generally treated as Austrian-sourced EUR4,200 per month for regular payments. The rates forcompensation where the work is performed or used in Austria. special payments (those that do not occur on a monthly basis, such as a bonus) amount to 17 percent; the maximum .07Tax trigger points contribution basis for special payments is EUR8,400 per year.Technically, there is no threshold/minimum number of daysthat exempts the employee from the requirements to file and The employer’s rates on regular payments amount topay tax in Austria. To the extent that the individual qualifies for 21.83 percent and on special payments, 21.33 percent.relief in terms of the dependent personal services article of The same maximum contribution bases apply.the applicable double tax treaty, there will be no tax liability. Due to the EU regulation 883/2004 (respectively, 1408/71The treaty exemption will not apply if the Austrian entity is in some cases) and a number of social security totalizationthe individual’s economic employer. agreements, extended business travelers are usually exempt from Austrian social security.Types of taxable incomeFor extended business travelers, the types of income thatare generally taxed are employment income, Austrian- Compliance obligationssourced income, and gains from taxable Austrian assets Employee compliance obligations(such as real estate). Tax returns are due by April 30 of the following year or by June 30 if filed electronically. If the taxpayer is representedTax rates – 2011 by a tax advisor, the deadline is automatically extended untilTaxable income is subject to progressive tax rates of up to April 30 of the next following year.50 percent, starting at an annual income of 11,000 euros (EUR): Generally, a tax return must be filed only if the individual’s taxable income exceeds EUR12,000 (in case of wage Annual taxable taxwithholding) and EUR11,000 (in all other cases). income (euros) Tax rate on total income Income tax on employment income is withheld at the source From To (wage tax). Nevertheless, a tax return is required if the 0 11,000 0% individual has additional annual income in excess of EUR730 not previously subject to employer withholding or more than 11,001 25,000 ((income – 11,000) * 5,110) / 14,000 one form of employment. A threshold of only EUR22 applies 25,000 25,000 20.44% for foreign income from investments. 25,001 60,000 ((income – 25,000) * 15,125) / 35,000 Employer reporting and withholding requirements + 5,110 If the remuneration is paid by an Austrian employer, the 60,000 60,000 28.73% employer is obliged to calculate wage tax on the employee’s behalf and remit it by the 15th of the following month to the 60,001 no limit ((income – 60,000) * 0.5) + 20,235 tax authorities. The employer is responsible for the correct remittance.Source: Income Tax Act, 2011 Payroll-related employer taxes include municipal tax (3 percentAustrian tax law distinguishes between regular payments, of gross compensation), contribution to the Family Equalizationwhich recur every month, and special (nonrecurring) Fund (4.5 percent of gross compensation), and surcharge forpayments. If total special payments are less than one-sixth Chamber of Commerce (approximately 0.4 percent of grossof all regular payments earned within the same tax year, the compensation). Depending on the social security status inspecial flat tax rate of 6 percent applies. If one-sixth of the Austria, exemptions are available.regular payments is exceeded, the amount in excess is taxedat the progressive income tax rate.16 / THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swissentity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  19. 19. Other Transfer pricing Austria has a transfer pricing regime. A transfer pricingWork permit/visa requirements implication could arise to the extent that an employee isIn general, there are no visa requirements for moves within being paid by an entity in one jurisdiction but performingthe EU (although there can be visa requirements for arrivals services for the benefit of the entity in another jurisdiction,from new member states). A visa must be applied for before in other words, a cross-border benefit is being provided.individuals from outside the EU enter Austria. The type of visa This would also be dependent on the nature and complexityrequired will depend on the purpose of the individual’s entry of the services performed.into Austria. Local data privacy requirementsDouble taxation treaties There are data privacy laws in force in Austria.In addition to Austria’s domestic arrangements that providerelief from international double taxation, Austria has entered Exchange controlinto double taxation treaties with about 90 countries to Foreign currencies can be exchanged at the daily exchangeprevent double taxation and allow cooperation between rates. Travelers’ checks can be cashed easily in Austria, andAustria and foreign tax authorities in enforcing their credit cards are accepted almost everywhere. There are norespective tax laws. restrictions on the import and export of either the euro or other foreign currencies.Permanent establishment implicationsThere is the potential that a permanent establishment could Nondeductible costs for assigneesbe created as a result of extended business travel, but this Nondeductible costs for assignees include, for example,would depend on the type of services performed and the payments by an employer that have already been treatedlevel of authority the employee has. tax-free on the Austrian payroll.Indirect taxesValue-added tax (VAT) is applicable at 20 or 10 percent ontaxable supplies. VAT registration may be required in somecircumstances. THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS / 17 © 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  20. 20. BelgiumIntroduction Contact René PhilipsA person’s liability to Belgian tax is determined by residence KPMG in Belgiumstatus for taxation purposes and the source of income derived Tax Partnerby the individual. Income tax is levied at progressive rates on T: +32 27083807 E: rphilips1@kpmg.coman individual’s taxable income for the year. In certain cases,separate flat tax income tax rates apply (e.g., for terminationpayments and lump-sum pensions).Key messagesExtended business travelers are likely to be taxed on employment income relating to their Belgian workdays.18 / THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swissentity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  21. 21. Income tax Resident taxpayers are entitled to personal exemptions, including exemptions for dependents. NonresidentLiability for income tax taxpayers are not entitled to any personal exemptionsA person’s liability to Belgian tax is determined by residence unless either (1) the taxpayer’s family is living in Belgiumstatus. A person can be a resident or a nonresident. or (2) at least 75 percent of the individual’s earned incomeA resident of Belgium generally refers to an individual who is subject to income tax in Belgium. Some taxpayers mayenters Belgium, as a single person or with family, with the be able to claim partial or full personal exemptions basedintention of remaining for more than 18 to 24 months on the tax treaty signed between Belgium and their home(depending on circumstances and other factors). countries.Under certain circumstances a person may qualify forexpatriate tax concessions. A taxpayer qualifying for the Social securityexpatriate tax concessions is always deemed to be a Liability for social securitynonresident taxpayer. A nonresident of Belgium is generally Extended business travelers employed by an entity locatedany individual who is not a resident or who is benefiting from in an EEA member state or Switzerland can, in most cases,expatriate tax concessions. remain subject to their home country social security scheme. They can obtain an exemption from paying social security inThe general rule is that a person who is a resident of Belgium Belgium, regardless of their citizenship. This exemption isis assessable on worldwide income. Nonresidents are based on the EEA/Swiss rules with respect to posting and/orgenerally assessable on income derived directly or indirectly simultaneous employment.from sources in Belgium. Other extended business travelers, in some cases,Extended business travelers are likely to be considered may stay in their home country social security system andnonresidents of Belgium for tax purposes unless they enter obtain an exemption from paying Belgian social security.Belgium with the intention to remain in Belgium for more This arrangement is based on the provisions of a socialthan 18 to 24 months (depending on circumstances and other security treaty signed between their home countriesfactors). Many individuals who move their tax residence and Belgium.to Belgium may qualify, however, for the expatriate taxconcessions. If no continued home country social security coverage and no subsequent exemption from social securityEmployment income is generally treated as Belgian-sourced contributions are available, an extended business travelercompensation where the individual performs the services will be subject to Belgian employee social security.while physically located in Belgium.Tax trigger points Compliance obligationsTechnically, there is no threshold/minimum number of days Employee compliance obligationsthat exempts the employee from the requirements to file and Tax returns are due in the year following the tax year-pay tax in Belgium. To the extent that the individual qualifies end, which is December 31. The actual filing due date isfor relief in terms of the dependent personal services article determined annually by the tax authorities but is typicallyof the applicable double tax treaty, there will be no tax liability. the end of June for residents’ tax returns and the end ofThe treaty exemption will not apply if the Belgian entity September for nonresidents’ tax returns.is the individual’s economic employer or if the individual is Resident taxpayers always have to file a tax return.working for a direct branch in Belgium of a foreign employer. For nonresidents who have received Belgian-sourcedSimilar rules apply if the individual cannot rely on a tax treaty. employment income, there is also a tax return filingTypes of taxable income obligation in all instances. Belgium does not have a systemFor extended business travelers, the type of income that is of final wage withholding taxes for employment income.generally taxed is employment income, including noncash Employer reporting and withholding requirementsbenefits in kind (such as housing, company car, etc.). Withholdings from employment income apply if theDepending on the actual facts and circumstances, some employee is paid via a Belgian payroll or is working for a directpayments/allowances may be tax exempt. branch in Belgium of a foreign employer. If wage withholding tax is applicable or if the employer deducts the remunerationTax rates for Belgian corporate tax purposes, the employer has toNet taxable income is taxed at graduated rates ranging from establish a wage tax reporting card (fiche 281.10).This fiche25 percent to 50 percent. Tax rates are the same for both 281.10 must be filed with the tax authorities generally in theresident and nonresident taxpayers. In addition, local tax month of March of the year following the year of payment.is due. Local tax is calculated as a percentage of incometax due. The actual percentage depends on the communewhere the taxpayer is living and may vary from 0 percent to10 percent. For nonresident taxpayers, local tax is always7 percent. THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS / 19 © 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  22. 22. Other Transfer pricing Belgium has a transfer pricing regime. A transfer pricingWork permit/visa requirements implication could arise to the extent that the employee isA work permit and a visa must be applied for before the being paid by an entity in one jurisdiction but performingindividual enters Belgium. The type of work permit required will services for the benefit of the entity in another jurisdiction,depend on the purpose of the individual’s entry into Belgium. in other words, a cross-border benefit is being provided.EEA and Swiss nationals do not require work permits and/or This would also be dependent on the nature and complexityvisas, except for nationals of Bulgaria and Romania, who still of the services performed.may require a work permit. Local data privacy requirementsLIMOSA registration Belgium has data privacy laws.Any employee who is working in Belgium and who is not Exchange controlsubject to Belgian social security has to be registered with Belgium does not restrict the flow of euros or foreign currencythe LIMOSA system. This registration has to be made by into or out of the country, although Belgium has money-the employer sending the employee. In certain cases, laundering legislation. This legislation provides for a seriesan exemption may be available. of preventive measures carrying administrative sanctionsDouble taxation treaties and imposing a duty on certain specified institutions andIn addition to Belgium’s domestic arrangements that provide individuals to cooperate to detect suspicious transactionsrelief from international double taxation, Belgium has entered and report them to the Financial Intelligence Processinginto double taxation treaties with more than 80 countries Unit, an authority created for this purpose. The provisionsto prevent double taxation and allow cooperation between of the law are applicable to a broad range of mostly financialBelgium and overseas tax authorities in enforcing their institutions and professions (including lawyers, tax advisors,respective tax laws. certified accountants, company auditors, notaries, bailiffs, etc.). The law contains, among other things, specificPermanent establishment implications provisions concerning client identification and due diligence,There is the potential that a permanent establishment in transfer of funds, due diligence with regard to unusualBelgium could be created as a result of extended business transactions, restriction of cash payments for real estatetravel, but this would be dependent on the type of services transactions and for transactions by a merchant (namely theperformed and the level of authority the employee has. prohibition of cash payments over EUR15,000), and disclosureIndirect taxes of suspicious transactions.Value-added tax (VAT) is applicable to taxable supplies of goods Nondeductible costs for assigneesand services. The standard VAT rate is 21 percent, but certain Nondeductible costs for assignees include contributionssupplies are subject to reduced 6 percent or 12 percent to nonqualifying company pension schemes. Most non-rates or, in some cases, a zero rate. VAT registration, in some Belgian company pension schemes are considered ascircumstances, is required. The EU reversed charge rules may nonqualifying schemes.be applicable.20 / THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swissentity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  23. 23. Bosnia and HerzegovinaIntroduction Contact Paul SucharBosnia and Herzegovina (BiH) consists of two territorial and KPMG in Bosnia and Herzegovinaadministrative entities (the Federation of BiH (the FBiH)) and the Tax PartnerRepublic of Srpska (the RS) and one district, the Brcko District T: +385 1 53 90 032 E: psuchar@kpmg.com(BD). Due to the insignificant size of the BD, this document willaddress only the legislation of BiH’s entities. Each entity has itsown income tax legislation. Generally, in both entities, a person’spersonal income tax (PIT) status is determined by residencestatus for PIT purposes and the source of the income derivedby the individual. The PIT base is determined by subtractingallowable deductions from the total income.Key messagesExtended business travelers staying less than 183 days in a year in the territory of the FBiH or the RS are taxed on theincome earned in the FBiH or the RS, respectively. THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS / 21 © 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  24. 24. Income tax Social securityLiability for income tax Liability for social securityUnless otherwise specifically stated, the information Social Security Contributions (SSC) in BiH are regulated at theprovided below applies to both the FBiH and the RS. level of the entities.A person’s PIT liability in the FBiH/RS is determined by Total SSC rates applicable in the FBiH amount to 41.50 percent,residence status. The FBiH/RS PIT Law defines a resident applicable to gross salary. Out of that, 31 percent is withheldtaxpayer as an individual who: from salary and 10.5 percent is paid in addition to salary.• Has residence in the FBiH/the RS Total SSC rates applicable in the RS as of February 1, 2011 amount to 33 percent, all of which is withheld from salary.• Has residence in the FBiH and spends a cumulative period of at least 183 days in the FBiH/the RS during a calendar year The existence of a totalization agreement between BiH and the home country of an expatriate may have a bearing on• Has residence in the FBiH and earns income by carrying SSC liabilities. out a dependent activity outside the FBiH that is paid from the budget of the FBiH and/or BiH (only the FBiH). Compliance obligationsA nonresident is considered to be an individual spending less Employee compliance obligationsthan 183 days in the FBiH/the RS during any calendar year. An individual is required to submit an annual return no later than March 31 of the current year for the previous year inThe general rule is that residents are taxed on their worldwide both entities if in that calendar year the individual had incomeincome and nonresidents on income earned in the territory from more than one source (e.g., two employment contracts,of the FBiH/RS. Extended business travelers are likely to rental income, and similar).be considered nonresident of the FBiH/RS for tax purposesunless they stay in the FBiH/RS for more than 183 days over Employer reporting and withholding requirementsone calendar year. Employers performing business activities in both entities are obliged to withhold and pay PIT and SSC for their employeesTax trigger points in each entity, respectively.In the FBiH and the RS, the PIT trigger point arisessimultaneously with the payment of income. OtherTypes of taxable income Work permit/visa requirementsThe following types of income are subject to PIT: income A visa is not required for most foreigners entering BiH (suchrealized through dependent activity (i.e., employment), as EU and U.S. residents), that is, they can enter BiH underindependent activity, property and property rights, the visa-free regime. However, foreign nationals must obtaincapital investment, etc. For extended business travelers, a work permit in order to work in BiH.the types of income that are generally taxed are employmentincome and all related benefits in kind. Double taxation treaties IBiH has entered into double taxation treaties (DTTs) withTax rates several countries to prevent double taxation. Further, BiH hasThe PIT rate in both the FBiH and the RS is 10 percent (as of incorporated into its legal system, through succession,February 1, 2011 in the RS). a number of DTTs from the former Socialist Federative Republic of Yugoslavia.22 / THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swissentity with which the independent member firms of the KPMG network are affiliated. 23943NSS
  25. 25. Permanent establishment implications Local data privacy requirementsA permanent establishment could theoretically be created BiH has data privacy legislation.as a result of extended business travel, but this would be Exchange controldependent on the type of services performed and the level of Generally, there are restrictions on transfer of foreignthe employee’s authority. currencies for residents. Certain reporting obligations areIndirect taxes imposed to control tax evasion and money laundering.Value-added tax (VAT) is applicable at 17 percent for taxable In addition legislation requires financial institutions andsupplies. The registration threshold is taxable supplies of other cash dealers to give notification of cash transactions50,000 Bosnian marks (BAM) (approximately EUR25,000) over BAM30,000 (approximately EUR15,000) or suspiciousor more in the previous year. cash transactions.Transfer pricing Nondeductible costs for assigneesBoth the FBiH and the RS have a transfer pricing regime, Generally, costs paid to assignees not employed by theand if a business travelers’ costs and taxes are recharged to company are considered as a nondeductible expense or anan entity in the FBiH or the RS or if a service fee is charged on entertainment expense, unless the company can prove thethe duties performed by the business traveler, such charges business purpose of the travel.may be subject to scrutiny under the transfer pricing rules. THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS / 23 © 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 23943NSS

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