The first steps to tracking STBVs

25 May 2017

Short-term business visitors (STBVs) have become a big story in the world of mobility. It’s clear that the nature of global mobility is rapidly shifting, and that short-term business travel, as much as long-term overseas assignments, are becoming the norm. For half of organisations taking part in our recent Managing Mobility survey, informal mobility now accounts for more than 10% of their mobile population. This is partly driven by perceptions of cost, but also by convenience – better technology means we can work from anywhere in the world.

But as STBVs become more common, they can also pose a bigger risk. The Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting (BEPS) project, intended to make sure that companies are taxed in the countries in which value-adding activities are carried out, is a significant development for global mobility. The lower thresholds for Permanent Establishment (PE) introduced by BEPS make even short-term business travel of increased interest to tax authorities.

It’s clear how much this is concerning organisations and their global mobility and HR professionals from a recent Business Traveller event we held in London. We already knew from our own research that the number of companies that have been challenged on PE is on the rise – about a quarter at the last count – but the stories we heard at our event reinforced that view.

It was also clear that companies are getting caught out when it comes to their STBVs by the rise in isolationism in some regions and by immigration legislation. The short-lived Executive Order signed by President Trump that restricted travellers to the US from some countries, for example, affected a significant number of STBVs, even though they weren’t the focus of the Order.

The problem for companies is that tracking STBVs, and their actions while they’re working away from base, isn’t easy. Is it possible that some of your people get on a plane without clearing it with anyone first? Would any of them even think to tell your tax Global Mobility people where they are? Or what they’re doing? Is HR talking to Tax? Do your people have the right visas? And what are they doing when they travel? If they’re making decisions, or signing a contract, that may increase the risk of triggering a PE.

If you haven’t already set out along the road to track your STBVs, it’s difficult to know where to start. But our experiences, supported by those of the companies we work with, suggest that a astep-by-step, methodical approach is best:

  • Decide what is your biggest risk area or population. Is it a particular set of employees? Is most of your travel concentrated on a few countries?
  • Look for the common data systems that capture the information for this population. If you use a single agent to book your corporate travel, or have a common expenses system, that’s a good place to start.
  • Find someone who works in immigration, global mobility, tax and business travel. What data do they have? Can you bring it all together?
  • Pilot a data-gathering exercise with the selected population. How onerous would it be for the whole population?

The good news, as we’ll discuss in future blogs, is that you probably already have all the data you need to track your STBVs. So now’s the time to use it.

 

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