1. Short Term Business Travellers (STBT): The Hidden Risk with Cross-Border Travel
Josee Bennett Associate Partner, Ernst & Young LLP
Jonathan Gomez-Trochez Senior Manager, EY Law LLP

2. Current market activity in relation to business travellers

3. What is the profile of a Short Term Business Traveller?
Global role
Virtual Employees
Foreign local hires
Global role not associated with frequent business travel population
Employed in one country but live and work in another country
Employed and work in one country but physically live in another country
Cross border travellers
Permanent Establishment (PE) / branch travellers
Foreign local hires
Occasional cross border business travel
Work and live in a PE country but regularly travel to the HQ country
One employment contract but role extends to several countries

4. Companies are exposed to a growing range of risks
An increasingly complex environment exposes companies to risks
Focus
Permanent establishment
Unexpected taxable presence created by our mobile associates
Staying compliant
Increasingly strict enforcement by authorities means it is more important to effectively manage all travel risk and reporting obligations
Right people, right place
Getting the right people in place at the right time can help manage workforce costs. Business travel is core to the business model.
Safety and security
In a challenging and unstable world, emergency and disaster recovery plans need to account for all employees at short notice
Immigration
Establishing that the traveller has the correct permissions to enter a country
Employment tax
Individual and employer tax withholding and reporting obligations
Regulatory compliance
Carrying out activities without the appropriate license can result in penalties and prosecution
Performance risk
Tax consequences have direct impact on project profitability and company performance
Associate safety
Lack of knowledge of employee presence could pose personal security threats, creating risks around duty of care and employment law
Time-consuming process
Cumbersome travel booking process can cause irritation or frustration
Associate exposure
Unexpected personal tax and immigration exposure

5. The global immigration environment for business travellers
Expanding globalization is being accompanied by an increase in isolationism/nationalism
Legislation and enforcement of existing rules are becoming more stringent
Traveller information is increasingly being shared between government authorities
Increased monitoring efforts and investment in border technology
Additional scrutiny at the border and increase in workplace audits
Heightened corporate sanctions, civil and criminal penalties for non-compliance
Governments are maintaining publicly accessible “blacklists” of non compliant companies

6. The immigration environment In Canada and the United States
Increased scrutiny and denials at the border
Increased denials of TN and L-1 applications at US ports of entry and consulates worldwide
In Canada, the USMCA gives border officers increased discretion to determine when travellers require a work permit
Increased workplace compliance audits
In Canada, 1 in 4 companies to be audited every year. Non compliant companies listed on government’s webpage.
United States visa/travel ban
Impacts citizens of Iran, Libya, North Korea, Somalia, Syria, Sudan, and some citizens of Venezuela with some exceptions for dual citizens and US Permanent Residents
US government increasing efforts to remove foreign nationals from the United States
The previous administration focused on removing violent offenders who were in the US illegally

7. Employers who have been non-compliant

8. The global tax environment for business travellers
Many countries now view enforcement as necessary to prevent potential losses in tax revenues.
Advances in technology are allowing tax authorities to access more data from other government agencies (and to provide data to other authorities).
The need for compliance and risk management has escalated in the past few years along with an increased focus on employee work location tracking.
Data remains a critical element in successfully navigating business travel risk across organizations.
There is great focus on business traveller permanent establishment (PE) compliance as a result of BEPS reform and enforcement.
As a result of recent US tax reform, companies are restructuring their businesses and sending foreigners into the United States, causing unintended business travel tax consequences.

9. The tax environment In Canada and the United States
The US Internal Revenue Service (IRS) has increased its enforcement of the nonresident withholding requirements under IRC Section 1441 and issued new campaigns to focus on nonresident alien tax compliance:
1042/1042-S withholding compliance campaign, NRA tax treaty exemption campaign, NRA Schedule A and other deductions campaign, NRA tax credits campaign
The IRS Employment Tax Division created an International Employment Tax Training manual.
Examiners have been instructed to increase the issuance of Information Document Requests (IDRs) related to short-term business travellers.
NY and California continue to be aggressive in auditing business traveller compliance.
The Canada Revenue Agency (CRA) has increased its enforcement of withholding and remittance obligations requirements under ITA Section 153(1)(a) and Reg. 102 with a focus on non resident employers who make payments to non-residents of Canada for services provided in Canada:
In 2016, the application for non-resident employer certification - Form RC473 was made available
The CRA has increased its audits
Scrutiny of corporate tax returns
Payroll Audit Query Sheet includes specific questions on non-resident employees

10. Trends – insights: Companies’ approach to business traveller risk
More companies are adopting measures to mitigate risks related to executives and travellers to high risk countries (e.g. lower tax risk thresholds, greater attention to visa and work permit requirements).
Audit activity is a key factor for determining high-risk countries/states for both tax and immigration.
Companies tend to have a lower risk threshold in their headquarters (HQ) country and countries where they cannot afford to be non-compliant (e.g. government contract).
Companies can undergo an assessment of historical travel data to understand and predict their future business traveller risk.
Companies who implemented a business traveller program 2–3 years ago are reassessing risk thresholds and business rules:
Trend towards a higher risk threshold (e.g., moving from day 1 taxation to day 30 taxation)
Exceptions still apply for the above depending on sector and risk appetite

11. Trends – insights: Industry focus on business traveller risk
Industry sector 1: financial services organizations
Industry sector 2: government contractors
Risk tolerance is mixed. – Focus on key locations or high audit risk locations, and living with the risk in other areas 
Focus has been on tax/reputational risk
PE, regulatory sensitivity high, especially in organizations with a branch structure (applicability of tax treaties)
Immigration and regulatory compliance is viewed as a necessary cost of doing business
Moving to automated solutions and automated pre travel approval controls
Employee experience is key
Employee validation of travel is common
Increased area of focus over past 6–12 months
Risk tolerance is typically lower as they hold government contracts
Risk of losing contract, which requires compliance
Focus has been on tax/reputational risks
Immigration is becoming an area of focus
Automated business traveller programs can help from a data and reporting perspective with DCAA audits

12. Trends – insights: Industry focus on business traveller risk
Industry sector 3: oil and gas
Industry sector 4: technology
First movers with respect to business traveller compliance
Risk tolerance changing:
Initially, view was full compliance
Shifting from no risk to manageable risk
Focus was immigration compliance
Typical source of data is time and/or expense data
Typically manage rig workers as “the treaty crew”
When an individual or team approaches 183 days, company has a separate crew on standby to finish the project
Mixed level of compliance
Location of HQ is often the driver
US HQ – compliance is a priority
Indian HQ – Cost management is a priority
Risk tolerance is medium
Balance between cost of compliance and cost of administration
Large focus on employee experience
Exceptions made for high-risk locations (UK, Canada)
Typical source of data is time and/or expense data
Stricter immigration laws (e.g. United States) are causing uncertainty and complicating long term resource planning

13. Questions for further reflection
Do you have a policy that covers short term business travel?
Do you know when a business visitor visa or work permit is required for employees’ travel to international destinations?
Do you know what activities being performed abroad by your employees can create permanent establishments?
Do you know when you are required to complete a registration with local authorities as a result of your employees’ short term travel?
Do you have a system in place to warn employees about risks to their personal safety (e.g. natural disasters)?

14. Questions?