How to Expand Your Business Globally.Tips From the Experts

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Expanding globally opens a whole host of complexities from a payroll processing perspective. This is especially
true for those “foreign” employees you transfer to the new country to work abroad. Let’s use Chris
as an example. Chris is Product Manager of your killer product, and you’ve asked her to serve as Managing
Director of your new overseas operation in Singapore. Chris has been working with your company
since the beginning and has 7 years of continuous service with your company.
Consider the following implications with Chris and others like her who you will reassign abroad.
• Chris’ current salary prior to her transfer overseas is well above the required minimum wage of $3,600
SGD per month (approximately $2,600 USD per month) to support her work visa.
• Chris’ 7 years of continuous service all contribute to pension and stock option vesting.
• Chris benefits from the maximum employer contribution to her 401K plan.
If you simply transfer Chris to the new company, Chris could lose benefits associated with her time of service
and related vesting. What some sophisticated companies do is pay the minimum salary to support
the work permit onshore in the local currency. And the balance between the total agreed to salary and
this minimum is paid “offshore” in the US in US Dollars. Related US taxes are withheld and deposited, and
time worked is reported accordingly, resulting in no gap in continuation of service. Note, however, that
this is the classic “split payroll” mechanism at work. While it is beneficial in helping the employee involved
retain continuity with the home company, it creates complexity, partly due to the taxation impact in two
or more jurisdictions.
Such structures need to be reviewed carefully with legal and accounting professionals both in the new
company and in the US-based company.
In addition to specific implications associated with Chris and other “Foreign” employees, other considerations
include the following:
• What national, provincial and local employee tax withholdings are required?
• What national, provincial and local employer taxes are required?
• What is tax employee tax reporting required in the new country?
Payroll Processing – More Complex than May Be Apparent
As with any business expansion into a new country, you will find a host of regulatory reporting and compliance
requirements. This is best handled by qualified professionals in the country where you’ve chosen
to expand.
Blueback Global can help you will all these challenges of expanding globally
Your primary objective is extending the reach of your killer product overseas. You need to develop and
implement marketing plans to extend the brand in your new markets. You will also be busy recruiting
and hiring the best talent you can find to expand into these markets.
Blueback Global keeps abreast of the latest developments in countries one might consider expanding
globally. Are there any new tax incentives offered in specific countries or regions that make it more attractive
than in the past? Perhaps there are major changes in employment and immigration laws which
have a significant effect on the viability of employing foreigners.
Why spend energy and valuable human capital on administrative, legal and accounting tasks. And it’s
impractical at best for you to keep abreast of new trends impacting foreigners looking to expand into a
new country.
Blueback Global’s professional services team possesses the breadth and depth of experience to cover all
the bases for you in a most professional and cost-effective manner.