Remediating and Preventing Tax, Immigration, and Employment Non-compliance

The global mobility programs of multinational companies are subject to numerous regulations and laws, not only at home, but in foreign locations. Among the latter are rules surrounding immigration, employment, and taxation of workers, which can be some of the most challenging to navigate. Most companies understand the need to adhere to local regulations when entering a foreign market and will not intentionally violate these. However, due to the complexity of each country’s criteria, there may be instances where compliance can become difficult. Failure to research local laws or seek professional assistance could quickly thwart a company’s global expansion plans; a lack of knowledge or understanding of a jurisdiction’s laws will not be sufficient to insulate it from the consequences of noncompliance. This article offers an overview of each area of potential non-compliance, examples of specific violations, and possible methods for remediating non-compliant scenarios.

Non-compliance Categories

With regard to global mobility and expansion, non-compliance is any instance in which a foreign company, subsidiary, or worker is in violation of rules that govern employment and business activity in a host country.

These rules can be divided into three primary areas:

  • Immigration and work permits
  • Tax and social security withholding and payment
  • Employment law

In each of these areas, there is a specific authority with- in the host country that monitors compliance. Should a violation be identified, the consequences can be significant, and can include fines, blacklisting, penalties, criminal charges, imprisonment, and/or future restrictions on business activity. Noncompliance violations can also invite ongoing scrutiny from authorities and tarnish a company’s reputation.

Common Non-compliance Issues

Below are examples of common non-compliance issues HR teams should be aware of in each of the three categories noted above. Although there are potentially many more areas of non-compliance, the following can serve as a starting point for mitigation and prevention strategies.

1. Immigration Non-compliance

Any company that deploys employees to foreign locations must comply with host country immigration requirements. There can also be certain requirements when a company hires foreign workers in its home location…