Contractors running out of time to comply with international tax regulations
By 2017, dozens of countries will exchange tax information automatically which will raise the levels of transparency in the international job market and expose offenders to an unprecedented risk of prosecution. Governments will also have authority to request information regarding suspicious foreign accounts of their own residents. Consequently, CXC warns that contractors are fast running out of time to comply with regulations or risk suffering a substantial penalty.
Jon Clarke, commercial compliance manager at CXC Global commented, “Governments have been clamping down on non-compliance for a number of years now, but we’re getting to the point where anyone not paying the appropriate levels of tax or complying with local legislative requirements is going to face the real prospect of financial penalties or worse. Another consideration is that once an individual is flagged as a “person of interest” there is often a statute of limitations that could permit the local authorities to look back for the preceding 5-10 years of activity dependant on your place of service’s jurisdiction. Many governments have already offered partial amnesty programmes, or & lsquo;voluntary disclosure initiatives’, to people who give themselves up. These have been largely successful with the UK programme collecting £1.1bn from 5,819 disclosures by the end of March. However, many of those, such as in South Africa are being closed early.”
“In the past some contractors may have been advised to & lsquo;stay under the radar’ when operating in a foreign country, however things have drastically changed and anyone attempting to continue do this in the future is likely to be on the receiving end of a heavy fine or other more serious sanctions. We’ve already seen an increased harmonisation between global tax authorities and governments and this will only develop in the future as the crackdown gathers pace. It’s likely that other countries will follow Belgium’s lead and adopt a mandatory LIMOSA type declaration for foreign and self-employed professionals performing services on Belgian territory. Crucially, this discloses the exact client address that the contractor will be working at as well as their personal details and contract dates, so their status can be checked up on by the relevant authorities whenever they like. This is also pushing onerous financial penalties and responsibilities onto the end clients themselves meaning there is more pressure to ensure agencies and contractors alike meet the local requirements. Schemes such as this as well as the overall clampdown on non-compliance mean that there really is nowhere to hide for those who try to beat the system so we urge them to get their affairs in order before it’s too late.”