How to remain compliant when placing talent overseas

legal requirements for recruiters

16th July 2023

You won’t need us to tell you that placing contract professionals in overseas roles can be a challenging business. However, due to legislative variations, operating in certain countries is harder than others, and that’s before we take into account legal shifts and changes that leave agencies uncertain about their compliance status. We’ve looked at some of the latest fluctuations from around the world to enable you to stay up to speed and to remain compliant wherever you are placing specialists.

Greek government launches ‘new tool’ to crackdown on tax evasion

Authorities in Greece have launched a new digital tool that will greatly enhance tax fraud identification efforts by enabling financial profiling and the cross-referencing of data during on-the-spot inspections. The software has been named ‘EleghosLive’ (which translates into ‘live inspection’ and will be used by the Greek Finance Ministry and the Independent Authority for Public Revenue (AADE) to tackle persistent tax evaders and consequently increase public revenue. It is expected to be launched this summer to coincide with peak tourism season and will be used alongside special fraud forces that will be conducting daily audits of businesses to ensure they are operating legally. Authorities are aiming to carry out more than 30,000 inspections this summer, so ensuring that any operations in Greece are fully compliant should be a top priority for agencies operating here.

Pakistan making significant efforts to rein in tax evasion

Another country placing tackling tax evasion at the top of its list of priorities is Pakistan where Federal Minister for Economic Affairs, Sardar Ayaz Sadiq, has warned that efforts are being stepped up in order to boost sustainable economic growth. The Pakistani authorities are increasing the use of financial track and trace systems following a report that highlighted a mammoth gap in tax revenue largely stemming from five sectors, namely real estate, tobacco, tires and auto lubricants, pharmaceuticals, and tea where around $3.3bn in tax has been lost. This major deficit has prompted the government to “strive to take all stakeholders on board to make viable tax policies to stop tax evasion and enhance local revenue collection, besides incentivizing the local manufacturing sector to discourage imports,” according to Sadiq. It’s anticipated that these efforts will lead to greater scrutiny being placed on international firms operating in the country meaning agencies placing specialists in Pakistan must ensure that they are following local regulations.

Jordan tax chief reports 50% decrease in tax evasion as a result of new measures

Jordan has already seen the benefits of imposing stricter tax regulations as a recent report has said the Middle Eastern nation has seen a 50% decrease in tax evasion and lost revenue since the introduction of new laws. Hossam Abu Ali, director-general of the domestic Income and Sales Tax Department reported that structural reforms introduced three years ago have contributed to the halving of revenue deficits and suggested that this serves as concrete evidence of the government’s triumph in curbing tax evasion and avoidance by both taxpayers and entities indebted to the state. He also revealed that tax collection figures for the initial five months of 2023 have surged, highlighting the effectiveness of the reforms. While other nations have made significant changes to their tax systems in order to catch out those acting illegally, Jordan is one of the first countries to post such impressive results.

Firms benefitting from tax exemptions in Bangladesh to face greater scrutiny

Companies benefitting from tax exemptions in Bangladesh are set to face greater scrutiny from tax authorities with transactions being analysed more closely in attempts to curb profit shifting and evasion, following the creation of the Income Tax Bill 2023. The new regulation says that, if a firm that enjoys tax exemption is engaged in any transactions with associated entities and tax officials find that transactions have not taken place as per open market prices and the income of the firms falls below the actual income, they would be able to impose regular tax rates. In the bill, which was raised in parliament by Finance Minister AHM Mustafa Kamal last month, an entity will be considered an associated enterprise if the firm enjoying the tax holiday participates in the entity’s equity capital, controls it, or takes part in its management, directly or indirectly. If the common person or persons, couples or descendants have investments, control or presence in the management of both companies, the firms will be treated as related enterprises. The development of this bill, and any ensuing regulatory shifts that it leads to, are well worth keeping an eye on for any agencies placing contract talent in Bangladesh who could see their operations become non-compliant in the coming months.

Another Briton charged and extradited over ‘Cum-Ex’ scandal

Regular readers of our blog will be unsurprised to find out that yet another individual has been charged as part of the ongoing ‘Cum-Ex’ scandal, which has seen dozens of people and businesses receive fines and prison sentences in recent months. Guenther Klar, a British citizen has been sanctioned for allegedly defrauding authorities in Denmark of more than £36m in the scheme which made multiple reclaims over single dividend payments, according to a statement from Danish police. Danish prosecutors began preliminary criminal charges in 2021 against Klar, along with two other British and three U.S. citizens, for defrauding tax authorities of millions of pounds. Klar is suspected of being one of the central masterminds of the fraud scheme, however further charges are expected to be brought over the coming months for other individuals and institutions that were involved. The case highlights not only the extent that European authorities are going to in order to tackle illegal behaviour, but also their ability to work together to sanction anyone acting non-compliantly.

Maintaining fully legal operations is difficult enough at the best of times, however, it’s made even more challenging when the regulatory landscape is almost constantly shifting. Many countries now punish non-compliance with major fines and even prison sentences so ensuring that you keep up to speed with legal changes to guarantee that you are operating on the right side of the law should be every agency’s top priority. If you’re in any doubt about your operations in whatever country you are working in then speak to our specialist team before it’s too late.

6CATSPRO is part of WorkwellTM Group

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