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Changing dynamics of global mobility – KPMG survey

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As the competition for international talent picks up steam, companies are looking to enhance their mobility policies to attract and retain key global talent, according to a new global survey.  KPMG’s International Executive Service’s Global Assignment Policies and Practices Survey, reveals that mobility programs are undergoing a number of subtle yet important changes. It said a growing number of organizations with international assignees are looking to tweak their mobility policies and practices in order to enhance their competitive position in the marketplace. One area where significant divergence is becoming clear is in the treatment of cost-of-living allowances.

While 58 per cent of companies responding to the survey have no limits or caps on allowances over and above normal compensation, companies headquartered in Asia Pacific are much more likely (77 per cent) to have no limits, versus those in the Americas (55 per cent),
And while 41 per cent of European companies impose negative cost-of-living allowances on their assignees, only 13 per cent of Asian companies do the same, it said. Almost three quarters (73 per cent) of companies offer tax equalization policies, meaning that their employees on international assignment pay no more or no less tax than they would have paid had they remained in their home jurisdiction.

The practice is more prevalent in the Americas than in Asia Pacific or Europe. But while tax equalization policies have remained fairly common since 1999, the survey indicates significant changes in how they are being managed. For example, over the past 10 years, companies have become 50 per cent more likely to expect assignees to pay any tax due on share purchases. “The results show that companies are taking a more strategic approach to calculating their tax equalization payments to achieve greater control and certainty over costs,” says Achim Mossmann, Partner, Global Mobility Advisory at KPMG’s International Executive Services. “At the same time, companies seem to be balancing out when it is appropriate for assignees to manage their own tax liabilities and when it is more cost-effective for the company to manage this role. Ultimately, this shows that companies are starting to take a more granular view of tax reimbursement policies in order to achieve a mutually beneficial arrangement with their assignees.” he added.

Commenting on the survey, Sharon Abeyratne – Senior Manager for Human Capital Advisory at KPMG in Sri Lanka said, “Global mobility is noticed as an evolving phenomenon in many multinational companies operating in Sri Lanka. In some instances companies have as many as 50 assignees on overseas secondments in various locations-some serving on very impressive regional leadership positions. There is a lot of talent in Sri Lanka and their skills can be demonstrated in a global environment.

Equally important is to note that international assignees return to Sri Lanka after gaining overseas exposure and facilitate knowledge transfer. They also bring with them strong relationships. Global mobility is thus a more attractive and mutually beneficial alternative to migration”.

Mr Abeyratne also said that local companies have begun to initiate their own mobility programmes often involving secondments to overseas offices or production facilities or to partner organizations of agencies which they represent in Sri Lanka. She added that it is important that mobility programmes are designed taking aspects such as legal, cultural, company and assignment policy regulation into consideration.

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