28th November 2023
For agencies placing contract, freelance, or EoR workers in roles around the world there are a host of issues to consider before the individual is able to take on the position. However, top of that priority list should be keeping these professionals compliant with employment and tax legislation. This is a challenging field to navigate at the best of times, and the task is made significantly harder by the fact that these regulations are shifting on a near-constant basis, forcing agencies to keep up to speed with legal changes in a raft of different jurisdictions. We’ve outlined some of the latest stories that could impact international employment legislation and highlighted what your business needs to keep in mind when operating here.
47 nations embrace crypto tax compliance framework
Compliance with emerging cryptocurrency laws and legislation is a hot topic in countries around the world with many regulators calling for new rulings to be put in place to help tackle the issue of crypto-related tax evasion. For those supporting the idea of new regulations, we have some good news. A collaborative statement made on November 10 by a total of 48 nations including the UK, USA and Australia, declared their commitment to adopting the Crypto-Asset Reporting Framework (CARF) by 2027. This pivotal resolution aims to enhance tax transparency in the swiftly expanding crypto-asset market and mandates the reporting of cryptocurrency and digital asset transactions, regardless of whether they occur through intermediaries or service providers. The new legislation essentially enables countries to automatically exchange tax-relevant information related to crypto-assets and aims to increase transparency across this field. In theory, it should enable cryptocurrency transactions to be monitored more effectively and clamp down on those using them as a vehicle to evade taxes in countries around the world. According to the statement, “the widespread, consistent and timely implementation of the CARF will further improve our ability to ensure tax compliance and clamp down on tax evasion, which reduces public revenues and increases the burden on those who pay their taxes.” While CARF has caught the headlines, it is not the only new regulation that looks to address crypto-related tax issues. In October, the Council of the European Union adopted the Directive on Administrative Cooperation (DAC8), a rule for reporting crypto taxes. This multifaceted approach on highlights the concerted efforts being made to establish comprehensive frameworks for managing and reporting crypto-related transactions. Agencies that place specialists working in crypto and finance should look to monitor any further developments closely as it certainly appears as if pressure is rising on any suspected of committing tax evasion in these remits.
Italy to seize $835m from Airbnb in tax evasion inquiry
It’s not just smaller firms that tax authorities look to tackle when it comes to tax evasion, Airbnb is the latest major, global organisation to have landed itself in hot water as a result of its failure to comply with international legislation. According to reports, an Italian judge has ordered that €779.5m (£677m) from the firm as a result of alleged evasion. Prosecutors have argued that the firm failed to collect tax from landlords on approximately €3.7bn of rental income. In Italy, landlords are required to pay a 21% tax on their earnings, a law that Airbnb challenged last year. The firm argued that Italy’s requirements on taxation contravened the European Union’s principle of freedom to provide services across all EU nations. The EU’s top court later ruled that Airbnb would have to follow the legislation. Authorities in Italy have looked to close the net on major firms operating in the country and have launched tax inquiries on other companies like Netflix and Meta. An Airbnb spokesperson commented on the announcement saying it was, “surprised and disappointed at the action announced by the Italian public prosecutor[…] We are confident that we have acted in full compliance with the law and intend to exercise our rights with respect to this issue.” Agencies operating in Italy should keep a close eye on the ever-evolving taxation landscape in this country as authorities are looking for any way to close in on those suspected of evasion in attempts to more effectively balance the domestic economy.
Brazil readies 15% minimum tax on multinational profits ahead of G20 presidency
And finally, the Brazilian government is looking to launch a minimum 15% tax on profits of multinational corporations as it looks to take on the role as G20 President. The legal shift would enable Brazil to align with the G20’s aims to combat tax evasion in an increasingly global and digital economy according to the secretary of international affairs at the ministry, Tatiana Rosito. The move also aligns with propositions made by the Organisation for Economic Cooperation and Development (OECD) which also suggested that large multinational companies pay a minimum 15% tax on their profits in all jurisdictions where they operate to deter profit-shifting to tax-favourable locations. The OECD estimates that the global minimum tax, which is already underway in many countries including South Korea and Japan, could generate up to $200 billion in additional annual revenue. According to commentators, the impact of the new rule will hinge on additional factors, as Brazil’s corporate income tax is already 34%, more than double the minimum threshold specified in the global agreement. Brazil is also looking to support the OECD’s guidance for countries to implement taxation on the digital economy, however, this move faces resistance from countries like the United States, home to major big tech companies. As Brazil takes on the G20 leadership role it is highly likely that further changes to its taxation system should be monitored closely, as it looks to align itself with other major nations on all things tax-related.
Keeping up to speed with international employment legislation
If your agency places professionals in Brazil, Italy or indeed in countries around the world, then you are strongly advised to keep abreast of all developments, as non-compliance can lead to major fines or even prison sentences for agency directors, even if it is the professionals that you are placing that ultimately breach the law. If you do not feel confident about your firm’s ability to navigate this ever-evolving landscape then speak to our expert team who can guide you through the various processes and keep you on the right side of regulations wherever you are operating.
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