Of the many reimbursements and allowances that U.S. companies make for employees who take foreign assignments, which one is the most essential?
Of the many reimbursements and allowances that U.S. companies make for employees who take foreign assignments, which one is the most essential? Discuss your reasons.
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The Most Essential Reimbursements and Allowances for U.S. Employees on Foreign Assignments
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The Most Essential Reimbursements and Allowances for U.S. Employees on Foreign Assignments
The expansion in global business has increased the need for deployment of employees on foreign assignments. When employees take foreign assignments, they take the responsibility of meeting the host and home country taxes, which have significant impact on their allowances and reimbursements (Traurig, 2000). Providing an appropriate remuneration, that takes into consideration the impacts of tax, is important in motivating the employees to take the foreign assignments.
The two most common tax strategies that a company can apply on assignee’s reimbursements are the tax protection and equalization. According to (Heaps, 2012), with tax equalization the employer pays the host and home tax costs for the assignee. The assignee must pay the “hypothetical” home tax as determined according to the company policy. An annual tax audit is carried out to determine whether the employee owes the company some “stay at home” tax or the company needs to reimburse stay at home tax balance to the employee. The tax equalization criterion has a number of benefits to the company and the employee. The tax protection strategy means the employee shoulders……………………………………………………………………………………………………………………………………………………………………………………………………………………………….
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