An exploration of whether using a global employment company could mitigate the South African tax risks in relation to inbound expatriates in multinational companies

Pavey, Janet Gail

Title: An exploration of whether using a global employment company could mitigate the South African tax risks in relation to inbound expatriates in multinational companies
Creator: Pavey, Janet Gail
Subject: Double taxation -- South Africa
Subject: Corporations, Foreign -- South Africa
Subject: Foreign workers -- Taxation -- South Africa
Subject: International business enterprises -- South Africa
Subject: Corporations -- Taxation -- South Africa
Subject: Value-added tax -- Law and legislation -- South Africa
Date Issued: 2018
Date: 2018
Type: text
Type: Thesis
Type: Masters
Type: MCom
Identifier: http://hdl.handle.net/10962/61368
Identifier: vital:28019
Description: The main objective of this research paper was to explore whether a multinational company could use a global employment company to employ its expatriates to mitigate, simplify or limit the tax risk for that foreign company when sending expatriates to South Africa. To investigate this topic, an interpretive research approach was used, a doctrinal research methodology was followed, and inductive reasoning was applied. The documentary data used in this research was publicly available. Firstly, the meaning of the term “expatriate” was explored, together with the types of employment arrangements commonly used to employ this type of employee. The South African tax consequences that an inbound expatriate may create for a multinational company were then analysed. These tax consequences were applied to the common types of employment arrangements to determine what the South African tax impact of these arrangements is likely to be and which entity within a multinational group is likely to be affected. It was investigated whether using a foreign global employment company provides any tax simplification or tax mitigation strategies for the multinational company for expatriates inbound to South Africa. The primary conclusions of this research were that it was found that using a global employment company may only provide a tax benefit in South Africa in very specific circumstances: (i) where the economic employer of the expatriate is the South African entity; (ii) where flexibility is required to easily move the expatriate to other jurisdictions; and (iii) where there are multiple home-host country combinations that the multinational group needs to consider when moving its expatriates. It would appear that using a global employment company as the employment arrangement for an inbound expatriate to South Africa may have a fairly limited application if its purpose is to mitigate tax risks. In effect, a global employment company is likely to provide tax benefits only where it acts as an international labour broker for the multinational company of which it is a part.
Format: 118 pages
Format: pdf
Publisher: Rhodes University
Publisher: Faculty of Commerce, Accounting
Language: English
Rights: Pavey, Janet Gail

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