Expatriate Tax

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Tax Professionals Team’s approach towards work always inspire me. A true professionals and a great subject matter expert … working with them is really being in safe hands.

Gulzar Didwania
Vice President – Tax, GE India

Word expatriate comes from the Latin ex meaning “out of”, and patria meaning “country”.

“GLOBAL TALENT HAS NEVER BEEN MORE MOBILE, THANKS TO CHANGES AT THE NATIONAL, REGIONAL AND INTERNATIONAL LEVELS WHICH HAVE EASED THEIR FLOW ACROSS BORDERS. MANY COUNTRIES, DEVELOPED AS WELL AS DEVELOPING, HAVE DESIGNED POLICIES AND PROGRAMS TO ATTRACT TALENTED PEOPLE AS STUDENTS, TEMPORARY WORKERS, AND IMMIGRANTS” — -GERRY RODGERS, DIRECTOR, INTERNATIONAL INSTITUTE FOR LABOUR STUDIES, INTERNATIONAL LABOR ORGANIZATION.

Expatriates taking up employment in India are required to comply with comprehensive taxation system, VISA requirement and FEMA regulations. Expatriate are required to get registration under FRRO, file their returns under Income Tax etc.

We help employees to comply with taxation and advise employers to frame effective policies.

Business move from high cost countries to low cost countries to tap high potential markets and to expand their international business globally. One of the key outcome of expansion is that the employees from one country have to move to other country under their employment contract I,e [from home company to host country] for setting up business, for operational requirements and for many other reasons of this type.

In these cases, where employee move from one country to another for job purpose they become subject to taxes in both the countries mostly.

1. In the home country on the basis of there residential status and

2. In the host country on the basis of the source income

Double taxation on income and increased compliances make international assignments less attractive. In order to incentivise their executives to accept international assignments, a suitable tax effective compensation approach needs to be carved out. For this purpose multinational companies doing cross border business have to take care of multiple foreign jurisdiction taxation on employees by designing suitable expatriate compensation policies.

Tax Equalisation” is one of the methods used to achieve the objective of ensuring that the employee does not suffer combined taxes on income (in home and host country) in excess of what he would have been paid if the individual continued to reside in the home country. The fundamental principle behind tax equalisation is that an expatriate should be no better off or no worse off as a result of assignment abroad. Under Tax Equalisation Employee bears tax to the same level they would have borne on the non-expatriate elements of their salary as if they had stayed at home. The employer bears the actual cost of the tax in the host country, whatever that might be.

Are you an employee? Or Are you an employer? We have solutions for both.

We give customised tools which helps employees to calculate, know and plan their tax liability and Employers to frame the effective tax equalisation policies.

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