18th November 2020
Contracting internationally holds real appeal for many experts seeking a range of global employment options. It provides individuals with a chance to gain significant professional exposure and network on a large scale. On a more personal level, it also presents the opportunity to experience different cultures and travel to new countries while working. And while travel restrictions are still in place globally, moving overseas is still possible for some – including for work (where the right visas have been issued, of course).
However, no matter where in the world you are planning to work, both now and in the future, remaining compliant with local, national and global tax regulations is key. Failure to do so could see contractors facing fines and possible criminal charges.
And with governments worldwide seeking to reclaim much needed funds during these difficult times, many are taking tougher stances on fraud. Here’s some of the latest international tax compliance news that contractors need to be aware of.
India’s tax authorities investigating evasion allegations
While the Panama and Paradise Papers were leaked a while go now, authorities are still investigating the revelations and are taking action against those found to have been involved in evasion. In India, for example, the income-tax division has been digging deeper into the finances and transactions of nationals named in the papers.
At the beginning of November, reports revealed that authorities in the country had requested that a number of individuals show their non-resident standing for the years 2013 to 2014 and 2017 to 2018. According to an official, “amongst those named within the ‘actionable record’ are politicians and members of the family of a high businessman.”
HMRC demonstrates powers against Chappell
Earlier this month, news broke that Dominic Chappell – former owner of BHS – had been sentenced to six years in jail for evading taxes. The former racing car driver was reported to have spent “hundreds of thousands of pounds on luxury items, including a yacht, a holiday to the Bahamas, a Bentley car and some Beretta guns.” However, he had failed to pay £600,000 due in taxes.
Following the conviction of dishonestly evading his liability to pay income tax, corporation tax and VAT between January 2014 and September 2016, Chappell was sentenced to a prison term.
Since the announcement, some experts have commented that the move indicates the stronger stance being taken by HM Revenue & Customs. According to Andrew Sackey, former head of the HMRC unit that worked on the Chappell case, this example demonstrates that the authority “is prepared to effectively deploy its criminal powers to underpin its strap line ‘nobody beyond our reach'”.
Wealthy businessmen arrested for evasion
Just last week, news reports in Israel revealed that two of the country’s wealthiest businessmen had been arrested on suspicion of tax evasion. The individuals in question are suspected of withholding “hundreds of millions of dollars” worth of taxes.
While investigations are on-going, the two businessmen have been barred from leaving the country for six months. At the time of writing, a gag order was in place to prevent the identity of the suspects being published. Tax officials have, however, conducted searches and seized records related to the businesses of both individuals.
UAE’s dedicated evasion court
In the UAE, Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister, Minister of Presidential Affairs and Chairman of the Abu Dhabi Judicial Department (ADJD), revealed that a court is to be established that will focus solely on money laundering and tax evasion crimes
The announcement signals another move by the UAE to clampdown on fraud, as Youssef Saeed Al Abri, under-Secretary of the ADJD, explained in a statement:
“The establishment of the court will also support the UAE’s efforts to combat such crimes and persecute perpetrators, through undertaking a series of steps and procedures, in coordination with relevant authorities and in light of an updated legislative infrastructure, which will reinforce the country’s competitiveness both regionally and internationally.”
Remaining compliant when contracting internationally
We’ve long stressed that compliance is crucial for anyone planning on contracting internationally, but the examples above really do demonstrate that no one is above the law when it comes to tax compliance. Over the last 12 months we’ve seen big brands and high-profile individuals facing charges over tax evasion and if those with the finances to challenge these allegations are still finding themselves on the wrong-side of the law, contractors will too unless they are operating compliantly.
However, as global experts in contractor management solutions we know that abiding by local and global legislation isn’t a simple process. It is wrought with country-specific variances that can easily catch you out unless you have the expertise to know what action to take. And with regulation being constantly adapted as the way businesses operate and people are employed continues to evolve, remaining compliant is truly an administrative headache that contractors shouldn’t have to face alone.