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Global Employment Tax Management Challenges and How Tech Can Help

Jan. 25, 2023, 8:00 AM

Mass disruption in recent years has changed the global workforce forever. It will become more mobile, expecting greater flexibility from employers.

Naturally, multiple simultaneous changes put immense pressure on businesses with a global workforce, where employees increasingly expect to be able to work wherever, and however, they choose. As a result, global mobility departments now have to deal with a growing workload, as they increasingly have to review their policies and processes to account for the increased movement of people as well as the external economic, legislative and social factors that may impact these employees and the wider business.

Understanding the Pressures Facing Global Mobility Departments

As part of the review process, GM teams must ensure their processes and quality control steps are updated where appropriate. Over recent years, technology has begun to play a more significant role in helping teams manage change. However, many tasks and processes still rely on spreadsheets and manual intervention, which drains resources and energy. Should this really be the case?

Generally, tasks can be divided into two groups: those that are manual and require human effort, and those that can be automated. For example, tasks that are largely data-heavy—and although they may require specialist knowledge, are usually policy- and process-driven—can be automated, whereas those tasks that require some knowledge and experience—but often need intervention to make decisions—cannot be. These tasks require engagement, energy, and interest. These are typically the processes that people prefer to be doing, instead of being occupied by repetitive, time-consuming manual tasks.

Of all the GM activities, the area that is ideal for automation is shadow payroll—a payroll that doesn’t physically pay the employee, but is a mechanism that allows the employer to meet their local payroll tax and reporting obligations in the host location for employees assigned overseas or working remotely, by replicating or “shadowing” the home payroll compensation reporting. However, in many companies, this area is still a time-consuming, stressful and mostly manual task that confronts businesses each month. With the expansion of the globally mobile workforce and an increasing need to keep up with legislative changes, shadow payroll is a growing part of the monthly work cycle of GM teams.

Nearly all the end-to-end process of global shadow payroll can be automated, as demonstrated by the illustration below:

Of course, there will always be some tasks that require human intervention. These include the setting up of employees in the system, and reviewing and resolving more complex issues. Providing a globally mobile employee with face-to-face support also remains paramount, to ensure their experience is positive. Technology will not solve every problem; instead, it offers an additional layer of support to help with the vast majority of the tasks involved.

This improved employee experience goes both ways. If teams are relieved of energy draining tasks via automation, they are then free to focus on the energizing tasks that require their input. The result is a happier, more productive, and more efficient team.

Unfortunately, the thought of introducing such technologies is often dismissed, due to the perceived complexities of getting them off the ground. After all, for teams that are already overwhelmed and overstretched, adding yet another thing to worry about to their list of concerns is not an appealing option. However, that worry simply doesn’t reflect reality.

Using Technology to Simplify the Complexities of Global Employment Tax

Initially, the adoption of new technology can seem like a mammoth task for management—where to begin, what technology to use, and how to manage it?

Once those questions have been answered, there is the additional challenge of finding the skills, time, and funding to move forward. All this uncertainty can lead to a business’s management feeling out of their comfort zone and asking if the solution is even worth the effort.

If this false perception of complexity can be let go, GM and tax teams will see that there is a simple way to integrate technology to aid business efficiency. This is the result of identifying which processes are manual and require human effort, and which can be automated.

The Main Considerations

Rather than viewing technology as a daunting, overly complex investment, businesses should focus on three simple pillars when considering its adoption, as explained below.

Cost: While there will always be costs involved, it’s important not to overlook the savings that come with technology integration, and to consider how the two compare in the long term. Sometimes, these costs may be upfront and be saved downstream, sometimes they may show their savings (or low-cost entry) immediately—as is often the case with software-as-a-service platforms.

Security: Security continues to be a cornerstone of technology adoption. Today, it’s not enough to just think of your organization’s security; you must also consider the security of the third parties you work with, the level of compliance they hold, and the potential impact they could have on your organization if they fall short on security.

Ease of use: When planning for the adoption of technology, start by evaluating the key components you need, where they sit in your ecosystem, and what they solve. Once this plan is in place, adoption can quickly become a pleasant experience, as businesses can avoid challenging-to-use tools and instead prioritize those that plug directly into their stack.

Above all, businesses must ask themselves what problem they are trying to solve with new technology. Remaining laser-focused on this will help them identify a technology that will meet the core business need. Flexibility should be a second consideration. It’s easy to fall for technology that offers a one-stop-shop solution to multiple business challenges, but a better choice is to opt for a flexible solution that has the potential to support the business as it evolves.

Finding the Right Tools

Once tax teams have considered the above points, they can then start finding the tools and technologies that will help them automate their tasks, free up their teams and begin to get ahead of the evolving GM landscape and its payroll pressures.

Some of the technologies that can have an immediate impact on GM and tax teams are considered below.

Integrated application programming interface solutions: Ensuring that a business can plug any solution it acquires into its existing technology ecosystem and processes, without needing to rebuild them, is critical. APIs simplify integration and help ensure that new tools and features do not compromise business continuity.

Low/no-code tools: No-code tools are breaking down barriers to entry for tech development. These enable business users to create their own simple tools—without assistance from in-house technology teams—while maintaining confidence that they aren’t going to break anything during the innovation process.

Case management tools: These are often embedded within tech solutions to help business users organize their work and ensure they don’t miss anything. Examples include up-to-date regional forms and specific tax calculators that help businesses stay on top of client and employee tax requirements.

Collaboration tools: Any technology solution chosen by a business will be part of a wider whole made up of third-party, best-in-class tools. This means tools need to integrate and be in sync with the others, so that businesses are able to call upon a “single source of truth” for all reporting.

The goal should not be to find a one-size-fits-all solution, but rather a set of tools that, together, will provide the easiest, safest, most cost-effective solution to tax and payroll challenges.

By embracing technology and adopting best-in-class tools, mobility and tax teams will be able to navigate increasingly complex and evolving global employment tax legislation. They will also benefit from automating their processes and taking back the time, effort and labor that has, until now, been wasted on keeping up with the shifting world stage. Ultimately, these tax teams will have support to avoid the pitfalls of getting it wrong, while keeping people and profit in mind. This means they’ll be able to seize the global opportunities and save on invaluable resources—people-power and financial—that are better used elsewhere.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Richard McBride is the founder and managing director of Certino.

The author may be contacted at: enquiries@certino.com