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00:00:17.024Welcome to this special edition of Different Makers Discussions Live.
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00:00:38.472I am Carla Wilson, chairperson of the Chartered Accountants Worldwide UAE Committee, and I am delighted to be joined today by two highly respected experts who bring both technical expertise and practical experience to one of the most important workplace issues facing organizations today: remote working across borders and the hidden risks businesses need to understand.
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00:00:53.453As organizations continue to embrace flexible working arrangements, many are finding themselves navigating increasingly complex tax, payroll, regulatory, and governance considerations when employees work from different jurisdictions.
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00:01:04.003While international remote working can create tre- tremendous opportunities for both businesses and employees, it can also introduce significant risks if not managed appropriately.
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00:01:19.873To help us explore these challenges, I am joined by Hugo Van Zyl, an international tax specialist with more than twenty years of experience advising globally mobile individuals and businesses on cross-border taxation, tax residency, and treaty matters.
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00:01:32.384Hugo has worked extensively on complex international tax issues and has advised on major tax regulation initiatives, bringing a wealth of practical insights into the tax implications of working arrangements.
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00:01:43.024I am also delighted to welcome Sarah Brooks, founder of Fikra HR, an award-winning HR leader with almost three decades of experience across the GCC and UK.
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00:01:54.313Sarah is a chartered fellow of the CIPD and has built a reputation for helping organizations navigate the intersection of compliance, people strategy, and workplace culture.
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00:02:06.433Her practical approach to HR governance and workforce management makers- makes her ideal- ideally placed to help us understand the people and policy considerations associated with international remote working.
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00:02:27.373Together, Hugo and Sarah will help us unpack some of the key questions organizations should be asking before approving overseas remote working requests, including cross-border tax exposure, permanent establishment risks, employee resident considerations, payroll implications, governance frameworks, and practical risk management strategies.
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00:02:36.272Hugo, Sarah, welcome to the Difference Makers Discussion Live UAE special.
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00:02:36.393Thank you.
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00:02:36.427Thank you.
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00:02:44.052As we approach this period, many businesses are receiving requests from employees who want to work remotely from another country, whether for a few weeks or for several months.
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00:02:57.024To begin our discussion, perhaps you could share what you see the most common misconceptions employees have about international remote working and where organizations are most at risk of unintentionally creating problems for themselves.
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00:03:01.051Over to you, Hugo, if you would like to start
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00:03:02.262Thank you.
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00:03:24.471I think the, uh, most common one is that the employees themselves think that they can enter the country as a visitor, because often they use a visitor's visa, which allows them sometimes 90 days, sometimes 183 days in the specific country, and they use the, um, visa title to determine their tax status, and that's not always true.
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00:03:26.072There's a counting of days.
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00:03:32.941UK, for example, they call work days, and from work day one they tax you on work done in the UK.
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00:03:35.010South Africa takes about 180 days.
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00:03:38.121So does every country have their own set of rules
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00:03:41.795And Sarah, what would you say that you see?
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00:03:53.915Um, it's along the same lines as what, um, Hugo's mentioned as well, is th- there also needs to be the understanding of not just the personal tax element, but also the implications to the business as well.
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00:04:07.225And if somebody is, for example, going on annual leave and tagging on this remote working element with an annual leave, um, period, it can then e- get even more complex around that situation.
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00:04:23.055So really, you know, businesses need to be mindful of, um, their own tax status as well as the individuals, the countries, the nationalities, and the regulatory requirements in each of them- those relevant countries before even approaching any remote working.
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00:04:32.355Whilst I'm all for remote working and the trust and, and, um, rep- you know, sort of relationship building that it does, um, but this, you know, it's fairly serious.
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00:04:34.464If you get it wrong, it can be an expensive mistake.
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00:04:35.834Absolutely.
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00:04:36.526I love that.
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00:04:40.536Um, Hugo, can we start with a person?
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00:04:53.045So if we have a UAE resident that decides to work from, let's say, South Africa or the UK or India for a couple of months, at what point does that create a tax problem for them as an individual?
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00:04:54.564Thank you.
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00:04:57.136So the ins- let's look- start at South Africa.
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00:05:01.526Um, and remember the UAE has treaties with all these said countries.
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00:05:06.855They unfortunately do not have a treaty with the US, so US is excluded from what I'm stating at the moment.
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00:05:10.954The country will normally tax you from day one.
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00:05:14.755So South Africa, if it's just an incidental visit, won't tax you.
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00:05:19.095But the treaty then overrides the tax rights of the country.
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00:05:39.305And the treaties, for example, state if you're employed by a UAE company, so you've not changed your employment, you are then in the other country for a period of normally either 180 days or 183 days, treaty-dependent, and some treaty says in a tax year, other refers to any 12 months.
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00:05:47.944Then only will the guest country, the country where you are remotely based, start taxing you or have the right to tax you.
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00:05:54.704So it is mostly for UAE employees working remotely, treaty-dependent.
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00:06:05.394And so would a UK national that comes to the UAE also remain UK taxed as long as they're in the UAE for less than 183 days.
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00:06:11.636So the UAE treaty, interestingly enough, gives the UAE the right to tax after 183 days.
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00:06:18.656But as we all know, there's no personal income tax in the UAE, so therefore it's not a problem if you come to the UAE.
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00:06:31.803But in your example, we're a UAE tax-free citizen- visits another country, they become taxable normally after 183 or 180 days in a 12-month cycle, and that's a complex calculation.
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00:06:40.892It's the day you arrive, counting forwards 365 days, or the day that you leave that country, 365 days backwards.
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00:06:41.562Okay.
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00:06:46.483But there are some treaties that refers to a tax year, and then you must determine your home country's tax year
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00:06:50.920So I think you, you touched on a point which brings me to my next question.
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00:06:53.879So obviously the UAE has no personal income tax.
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00:07:07.149So many people just assume that their income earned, regardless of their location, if it is bound and supported by a UAE employment contract, they are tax-free wherever they go.
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00:07:11.319Why would you say that this assumption is very dangerous for an individual to make?
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00:07:13.110Uh, two things.
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00:07:21.348The one could be the source rules, like the UK has the work days count, and South Africa also works on the, um, number of days in a tax year.
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00:07:27.218So although the trigger is in a 12-month cycle, the calculation in South Africa is on a tax-year basis.
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00:07:45.858But there is in all the tax treaties, and literally all the OECD model tax treaties, as well as the United Nations model, a provision that if your employer, employer recoups some of your salary from the branch, if you're sitting in another branch, then it becomes taxable in that country.
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00:07:55.918So the two things could be triggering it, source rules of the specific country where you're in, and also does the treaty deem it to be taxable because it's recouped.
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00:08:16.908So for example, if you're working for a big hotel group and you're going to physically work in that hotel's, um, uh, property in, for example, Durban in South Africa because the weather is nice now, it's, it's, it's cooler weather, it's not as hot as Dubai, um, you unfortunately, they will intercompany charge, and therefore that makes you taxable in South Africa from day one.
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00:08:19.269The 183 days are not going to protect you.
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00:08:30.189So I think it's clear from what you're saying is that your UAE tax status doesn't guide your international tax status- No … where you choose to work remotely.
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00:08:42.139So can someone end up being a tax resident in two countries at the same time, and how would you be able to untangle that through the double tax treaties?
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00:08:43.578Right.
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00:08:52.509Yes, you can, and that's specifically dealt with in the double tax, tax treaties, normally in Article 4, which deals with the so-called tiebreaker tests.
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00:08:53.619I'll quickly run through them.
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00:08:55.110There's four important ones.
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00:09:00.099The first one is normally the place where you have your permanent home available.
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00:09:01.188Not owned, available.
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00:09:01.958Can be rented.
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00:09:07.558If you have a home in both countries, then the next test is your center of vital interest.
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00:09:12.369That's where your family is, core family, and where you are employed, where you're earning your new wealth.
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00:09:15.558Not how rich you are in the other country, it's where you are employed.
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00:09:26.330If that does not determine it, for example, a pilot in the UAE often leaves their children at home in South Africa or in the UK because remember, most of the pilots in UAE are expats.
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00:09:30.868Then we go to the third one, which means your habitual home.
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00:09:34.327That's the home where you go and rest and recuperate.
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00:09:35.947Very important, recuperate.
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00:09:38.837It's not necessarily where you spend more days.
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00:09:44.278There was a very, very important UK case, HMRC against Jonathan Oppenheimer.
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00:09:48.408Yes, for those South Africans listening, the family is the Oppenheimers we know.
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00:09:59.397He spent more days in the UK than in South Africa, but the court found his habitual home remained South Africa because that's where he went to rest and recuperate.
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00:10:06.547The visits to the UK was purpose, and it was to go and attend school functions and be with his child.
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00:10:11.258He was not employed in the UK, so the center of vital interest could never trigger it.
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00:10:15.407And yes, the family is all well known that they have a, a property in the UK.
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00:10:21.988That property has won the best garden in the UK for the seven out of the last 25 years, so it's a very well-known property.
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00:10:25.067So no, it's not always property, it's not always employment.
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00:10:26.606The three tiebreaker tests.
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00:10:40.378If none of those tests answer, the fourth one is were you a national, and the fifth one, if you're a national in both countries, um, then it is what the two parties agree in a mutual agreement process, MAP, MAP process
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00:10:49.583So that sounds quite, um, complicated and not always straightforward for an individual to, um, determine within themselves.
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00:10:55.823So it sounds like that the best thing would be if you are uncertain, to ask before you get on the plane.
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00:10:56.734Correct.
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00:10:57.033Right?
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00:10:58.732Take the advice before you get on the plane.
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00:11:18.243So if we move then to the business side of it and the permanent establishment risk that organizations carry, in plain English, what is a permanent establishment, and why should a business owner care if somebody- if one of their staff is sitting in another country?
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00:11:24.332So most countries have a different definition, but again, the treaties, um, are relatively the same.
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00:11:33.633So the first test is if there is a premises or an office lasting for more than six months or construction site more than six months.
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00:11:38.863So normally a remote worker, digital nomad, does not work at a specific office.
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00:11:43.863So that one for most of the digital nomads, the employees are not a risk.
00:11:43.863 -->
00:11:47.903But the one that really becomes a risk is the seniority of that person.
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00:12:00.403If that person habitually signs contracts or enter into contracts on behalf of his offshore or home country-based employer, that in itself makes it a permanent establishment.
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00:12:02.134So those are the two most critical ones.
00:12:02.134 -->
00:12:06.222There's finer nuances, um, but there's a specific exclusion.
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00:12:15.863For example, if it's at the airport and there's a display room of high, uh, high-end or luxury Louis Vuitton, um, display.
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00:12:18.072That display is not a branch.
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00:12:23.783It's purely a display, and normally most treaties excludes a storeroom or store facility.
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00:12:27.123The bonded warehouses, they are not permanent establishments.
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00:12:28.812Okay.
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00:12:41.513If a UAE company accidentally creates a PE abroad, what's the real-world consequence, and what do they do if they end up filing or having to pay?
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00:12:54.013So interesting is that in the real world, and specifically the examples you used, India and South Africa, it's not just tax, it's exchange control as well, okay, because both countries have very strict exchange control.
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00:13:03.673The second one is then two, um, um, important levels of taxes, and that is normally the income tax side and the value-added tax side.
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00:13:16.563Because that can trigger, if you then exceed your turnover, that you may not be a taxable profitable company because you're a cost center, but your turnover exceeds the VAT, VAT threshold.
00:13:16.563 -->
00:13:21.113So for example, in South Africa, um, it's 2.5 million, um, rand.
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00:13:23.332That's like £100,000, and you're there.
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00:13:26.702And the income tax has two levels itself.
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00:13:31.383It is the company paying tax, and then the company's obligation to withhold tax.
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00:13:39.913So normally, if the digital nomad or the remote worker is just in India, there's no obligation on the UAE company to withhold tax.
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00:13:44.393It is for that employee to declare his tax to the Indian authorities.
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00:13:57.613But the moment if that PE, permanent establishment, was deemed to be present, they have an obligation to register, file for income tax, deduct payroll taxes, and it could be more than just income tax.
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00:14:04.013It could be Social Securities, medical aid, all those type of things, and then the value-added tax level of that country
00:14:05.453 -->
00:14:18.663So if I understand correctly, what you're saying is that if a PE is triggered, you are then not just only required to pay tax, you actually have to register within that jurisdiction to be able to pay the tax.
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00:14:24.513It's not as simple as I'll do a bank transfer, or I'll write a check and my tax obligations have been met.
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00:14:34.073There is obviously a registration process and a whole administrative process that you would have to be able to, to execute to remain compliant under those circumstances.
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00:14:41.703And Sarah, from the people side, you know, listening to all of this, how do you normally see that this risk usually creeps in?
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00:14:45.123Do senior staff normally take informal arrangements?
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00:14:47.613Is simply nobody answering the question?
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00:14:55.403Are people kind of like, "We want to be fluid and supportive of our staff, so, you know, we want to embrace a work from anywhere policy"?
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00:14:56.774What do you see on your side?
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00:15:01.383A combination of everything you've just mentioned, to be honest.
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00:15:12.432Um, there's a number of companies that are quite open, uh, to the fluidity and allowing people to work remotely attached to or independent of leave breaks that they've got.
00:15:12.432 -->
00:15:29.153Um, there's a lot of UAE companies that actually employ remote workers on a permanent basis as either sub- you know, consultant subcontractors, fine, or employees that are physically working in other countries and maybe don't understand the tax implications that there are.
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00:15:44.842Um, they believe that because they're in a tax-free country, obviously we have income tax and corporate tax, but, um, you know, from personal income tax, that there's no applications around that for, um, employees that they might have permanently working in India, for example.
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00:15:56.943Um, and that's most common with IT companies, um, e-commerce and things like this as well, where it's cheaper to hire staff members from, and, and keep them based in, in the subcontinent, for example.
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00:16:06.001Um- From my end, it's funny that you mention the hospitality side of things because that's my b- my, um, corporate background is hospitality for many years.
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00:16:17.941Um, and it's very common for individuals to be put on secondment to, for… I mean, even myself, I was initially put on a secondment to Oman for a month, for example, from the UAE back in 2009.
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00:16:25.900Um, and thankfully, Oman is a tax-free coun- country as well, but there was no conversation and discussions about tax status or anything with myself.
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00:16:28.041It wasn't even on my radar back then.
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00:16:40.591Um, so I think for individuals who are, um, employees of a company who are requested, they see it as a bo- as a, as an opportunity to, to improve their situation, their status, so they're happy to move.
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00:16:45.951They just… And they don't necessarily think of the consequences of where they're moving to and what that might be.
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00:17:04.751Um, some companies that tend to be a little bit more of, um, global market players, if you like, the larger hospitality groups that are a bit more global than regional, um, will have clauses within the contracts that may mention that the company would then take responsibility for any tax implications.
00:17:04.751 -->
00:17:11.451Um, others will do the reverse and say it's up to the individual to, to make sure that they, um, comply with tax implications.
00:17:11.451 -->
00:17:21.320So my advice is always get proper tax advice before you sign and agree to anything, um, um, from a tax advisor as well as from a legal advisor.
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00:17:22.090Mm-hmm.
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00:17:23.540Sarah, I think a very valid comment.
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00:17:24.872Carlow, if I can quickly jump in.
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00:17:25.230Of course.
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00:17:33.881If your contract provides and you are seconded, be adamant that the company provides at least a tax advisor at their- Mm … expense.
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00:17:38.401Mm. So that equalization will, uh, top up the different tax is a nice-to-have.
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00:17:48.031You can't always demand that, but at least ask that their tax advisor, because the alignment between corporate tax and personal tax then becomes extremely important.
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00:17:48.902Absolutely.
00:17:48.902 -->
00:17:49.672Especially for that big groups.
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00:17:52.881It's, it's their brand, and it's your employment status.
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00:17:53.840Mm-hmm.
00:17:54.990 -->
00:18:02.390So I think this obviously leads onto the next topic, which is all about payroll contracts and the regulatory side of the people.
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00:18:12.509So Hugo, you know, you touched on a point, um, about making sure that they have the tax covered in an, in an employment contract and/or a secondment contract.
00:18:12.509 -->
00:18:17.660And, you know, my- so my question to- is, uh, where does payroll sit in all of this?
00:18:17.660 -->
00:18:31.249Because, you know, we talk about company tax, and you briefly mentioned that there could be, you know, specifically in South Africa, things like PAYE, which is obviously another form of tax that can also be triggered under certain circumstances.
00:18:31.249 -->
00:18:44.398So if a company has an employee that is physically sitting in another country, how do they know what triggers things like withholding tax or employee tax from an organization?
00:18:44.398 -->
00:18:46.739So if we kind of look at it from a different tax angle.
00:18:47.278 -->
00:18:47.298Yeah.
00:18:47.298 -->
00:18:58.779So the … For, for any corporate, even a small company, the big question would then be look at the treaty, do, does the presence of the employee create a permanent establishment?
00:18:58.779 -->
00:19:00.569If it does, address it.
00:19:00.569 -->
00:19:14.648One of the examples could, for example, be, say, you can go and work remotely while on holiday or for your sabbatical or whatever, but during this period you will not be part of decision-making, contractually agreed, so that you do not trigger that point.
00:19:14.648 -->
00:19:25.200Secondly, the, uh, um, next thing is that the employee must undertake not to claim on the social benefits o- or securities of that country.
00:19:25.200 -->
00:19:35.638For example, do not arrive in England and register for med- uh, for any medical benefit because that triggers a presence for the company because they then have to register and contribute.
00:19:37.006 -->
00:19:49.605So whose obligation, because it's obviously a payroll tax which is linked to an individual, in this circumstance, where would the obligation lie for that payroll tax to be paid?
00:19:49.605 -->
00:20:00.994Would that be an obligation that the receiving entity, so the, the, the visiting country, would they expect that to be the obligation of the individual, so they should then pay their own tax?
00:20:00.994 -->
00:20:05.815Or would we expect a company to go, "We need to withhold that"?
00:20:05.815 -->
00:20:08.875And again, I'm not talking about let's restructure someone's payroll.
00:20:08.875 -->
00:20:15.625I'm just talking about where does the actual obligation lie in terms of the actual payments to the country that's now implementing this tax.
00:20:15.785 -->
00:20:21.115All, all payroll deductions, whether it's, uh, social security, medical, is that of the employer.
00:20:21.115 -->
00:20:27.785And the actual tax payment, whether there was a withholding on payroll level or not, is that of the employee.
00:20:27.785 -->
00:20:44.836So the withholding is clearly that of the employer, and I suggest that contractually it be agreed that it's, uh, there is no reason to deduct, and the employee undertakes stating that, "Thank you for the benefit. I undertake to sort out my own tax." Tax.
00:20:45.894 -->
00:20:46.204Okay.
00:20:46.204 -->
00:21:00.894So Sarah, my question to you then comes, if we are now talking about somebody that's sitting in a remote space who's currently on a UAE employment contract, does that still hold up?
00:21:00.894 -->
00:21:07.255And what happens to things like WPS and visas when they are currently sitting out of the country?
00:21:08.942 -->
00:21:18.261So things like WPS, which for those that are not familiar, is the wage protection scheme that we have here under mainland-governed, mainland licensed entities in the UAE.
00:21:18.261 -->
00:21:21.290Um, and some of the free zones also have the same.
00:21:21.290 -->
00:21:25.642And it's basically, um, a protection for payment of wages.
00:21:25.642 -->
00:21:28.810Is the th- as the- that's what it says on the tin, it's wage protection.
00:21:28.810 -->
00:21:33.560Um, so it enforces, it's a process that's enforced for companies to pay the payroll through.
00:21:33.560 -->
00:21:35.141That has to continue.
00:21:35.141 -->
00:21:48.471Um, unless the employee stops working for the company, unless the emp- which would entail cancellation of visa, cancellation of work permit, and cessation of employment in the whole part, then that's the, uh, that's one instance.
00:21:48.471 -->
00:21:56.540The other is if they're on unpaid leave, um, for any reason, or, uh … They're the only two times where salary would not be paid through WPS.
00:21:56.540 -->
00:22:09.750Um, there are cutoff limits on the number and, uh, the total value and the quantity of a head count that needs to be paid through the WPS system, um, which is currently at 85% of both the head count and the total value.
00:22:09.750 -->
00:22:13.771So there is a little bit of, if you like, wiggle room in terms of that.
00:22:13.771 -->
00:22:25.501But technically if somebody is on your trade license and on your labor card, uh, work permit and visa, then their salary still needs to go through WPS, and that is payable into a UAE bank account.
00:22:25.501 -->
00:22:32.461Um, visas would be retained during that time because they're still technically, it's associated with the work permits.
00:22:32.461 -->
00:22:35.342You can't have a work permit without a residency visa.
00:22:35.342 -->
00:22:42.820Um, the two don't, don't, um, stand alone independent, if you see what I mean, unless you're, uh, an Emirati national.
00:22:42.820 -->
00:22:54.480Um- So it's not sort of possible to press pause on the visa, uh, duration to say, "Right, they're gonna be out of the country, so we'll press pause on it," and then it'll continue when they come back in again.
00:22:54.480 -->
00:22:55.740It continues running.
00:22:55.740 -->
00:23:16.729Um, and it's an important point to note on that one is because one of the regulations with regards to the UAE visas is that if you are out of the country for six months, um, or your visa technically expires whilst you're out of the country, then the company- the visa is essentially canceled, but it still needs a formal cancellation process that needs to be carried out by the company.
00:23:16.729 -->
00:23:20.888So even though your visa might expire, it still needs to be formally canceled.
00:23:20.888 -->
00:23:38.059If you were to reenter, you would be stopped on entry, and likewise, if you're coming back in after six months and one day, your visa is essentially, um, canceled, uh, for want of a better word, and would need to be formally either reinstated or, um, canceled and reissued through the company.
00:23:38.059 -->
00:23:40.348So it's a, it's a bit of a challenging situation.
00:23:41.169 -->
00:23:55.039Can I add to that also very important, Carlow, is that f- if looking at the UAE also for UK-based employees coming to the UKE, so, uh, UAE, it is important to remain on the formal payment system, whatever it is.
00:23:55.039 -->
00:23:57.769Like in the UK on the tax code that issued.
00:23:57.769 -->
00:23:58.029Mm-hmm.
00:23:58.029 -->
00:24:01.869Because that keeps you contributing in the UK to Social Security.
00:24:01.869 -->
00:24:06.950And the other benefit in the UAE, it keeps on counting for your end-of-service benefit.
00:24:06.950 -->
00:24:13.638Because if you're removed off the WPS, so you're not paid to a UAE bank account, you are now paid to a foreign bank account.
00:24:13.638 -->
00:24:17.159When it comes to end-of-service benefit, you are losing out.
00:24:17.159 -->
00:24:22.959So if you are employed while working remotely, please try and protect.
00:24:22.959 -->
00:24:29.239There's no additional cost to your employee- employer, but try and protect those long-term service benefits.
00:24:29.239 -->
00:24:35.307So for those who don't know, end of service benefits in the UAE, for example, pension fund's another big thing.
00:24:35.307 -->
00:24:38.428We have a end of service benefit calculated.
00:24:38.428 -->
00:24:39.606Uh, Sarah, help me.
00:24:39.606 -->
00:24:41.587It's a, it's a week per
00:24:41.587 -->
00:24:52.366year or- It's, um, it's 21 days for the first three years of service, and 30 days for ev- for … Sorry, first five years of service, and then 30 days for every year after that.
00:24:52.366 -->
00:24:57.467Um, and it's, um, days of basic salary, um, for the tenure.
00:24:57.467 -->
00:25:02.217So it's your … It, it's fairly straightforward, but somewhat complex to explain calculation.
00:25:03.198 -->
00:25:11.247But, but in short, it's not like the UK where they'll put you on gardening leave- No … and we're gonna pay you while you're not working, and the UAE is paid out as cash.
00:25:11.967 -->
00:25:13.267So it's two different things.
00:25:13.267 -->
00:25:15.176You can have gardening leave in the UAE.
00:25:15.176 -->
00:25:18.298So if you are given notice from your employment, there's three options.
00:25:18.298 -->
00:25:23.617Um, you're paid in lieu of notice, you're asked to work your notice, or you're put on what is essentially gardening leave.
00:25:23.617 -->
00:25:38.696Once you have completed a minimum of one year's employment in the UAE, you're eligible to receive this gratuity payment, which is what you're mentioning, which was set up, um, uh, many years ago as an alternative to a pension or social security fund, um, for expatriate workers.
00:25:38.696 -->
00:25:40.906Uh, um, UA nationals don't have this.
00:25:40.906 -->
00:25:43.307They have their own pension and social security.
00:25:43.307 -->
00:25:56.957So, um, this gratuity fund is accumulated over time of your employment, and it's then calculated when you leave, and it is completely separate to, as a separate payment from, any of your notice period payments.
00:25:58.127 -->
00:25:58.186Thank you.
00:25:59.207 -->
00:26:12.186So I think from what I understand is what we're saying is that regardless of your location, if you are sitting on a UAE employment contract, all those benefits follow you unless your contract is physically terminated.
00:26:12.186 -->
00:26:25.086So we expect an individual who is sitting in a remote European island, enjoying their, um, summer break, to still be able to earn the benefits as per their employment contract.
00:26:25.086 -->
00:26:25.146That includes being paid through WPS.
00:26:25.146 -->
00:26:32.106That includes things like their medical insurance benefits, as well as their gratuity calculation.
00:26:32.737 -->
00:26:32.936Yeah.
00:26:32.936 -->
00:26:33.644All right.
00:26:33.644 -->
00:26:36.676And their accruals for their annual leave and things like this as well would all continue.
00:26:37.657 -->
00:26:37.936Okay.
00:26:37.936 -->
00:26:38.307Great.
00:26:38.307 -->
00:26:43.217So it then takes me onto my next topic, which is very relevant.
00:26:43.217 -->
00:26:51.217So obviously we've got all of this that we're talking about in terms of everything that is knowledge within the expertise themselves.
00:26:51.217 -->
00:26:56.768So the experts are fully aware of everything that happens, but a lot of businesses, again, want to be flexible for their staff.
00:26:56.768 -->
00:27:02.426They want to be able to allow people to enjoy these benefits that are becoming so popular globally.
00:27:02.426 -->
00:27:09.076But a lot of this happens through a WhatsApp request, an email notification.
00:27:09.076 -->
00:27:11.967Uh, we're changing our internal policy.
00:27:11.967 -->
00:27:14.467We allow people to be able to go and do this.
00:27:14.467 -->
00:27:16.446You'll get a sure, no problem.
00:27:16.446 -->
00:27:22.826Um, Sarah, what should a proper approval process actually look like?
00:27:24.397 -->
00:27:38.416So my advice to companies is to have a proper policy in place with regards to what is remote working, what the boundaries are, the guidelines, framework, if you like, how many days it is applicable for in the circumstances.
00:27:38.416 -->
00:27:50.406And that should also impr- include a process for the approvals, which it can be done through WhatsApp, it can be done through, um, emails, or it can be done through an HR system.
00:27:50.406 -->
00:27:57.857It's entirely up to a company, but it just needs to be documented somewhere to ensure transparency and consistency of process and approvals.
00:27:57.857 -->
00:28:09.077Um, and then the process should also in- and the policy document rather, should also include the details of that approval process and any considerations so that that is like a reference guide.
00:28:09.077 -->
00:28:15.576So if somebody gets asked, "Can you go and work remotely?" Or, "I want to go and work remotely," they can check the rules and regulations that are there.
00:28:15.576 -->
00:28:23.167Like for example, as Hugo said, a tax advisor will be provided to facilitate you during this time, for example.
00:28:23.167 -->
00:28:37.307Um, or, you know, the company under- we're asking you, therefore the company will undertake to pay any income tax that you may be eligible to pay, um, whilst… Or liable rather than eligible, but to pay whilst you're on this secondment.
00:28:37.307 -->
00:28:49.057Um, so all of that needs to be documented in the policy, um, with obviously not to be, um, completely exhaustive in the different countries and the specific tax regulations.
00:28:49.057 -->
00:29:00.257But at a general level to say, this is what we'll look at, this is how we'll approve it, this is what we'll do in X, Y, Z case, um, so that the employee has the information to hand and can make an informed decision.
00:29:01.390 -->
00:29:12.559And can I add, which became very important now for South Africans and UK people, is that the, the clause that the company can unilaterally terminate that arrangement and give a period of notice.
00:29:12.559 -->
00:29:32.980So for example, the, we saw when the, um, American-Iran wa- war broke out that some of the corporates said, "You'll have to come back on the first flight, and it is your duty to get the, um, uh, flight permissions and, and so on." Because that clearly indicates there's no intention to create a branch on the other side.
00:29:32.980 -->
00:29:48.579Because in what we saw in the UAE, what you allu- alluded to, Carla, um, and, and, uh, also Sarah, is that some of these people would see their visas, um, visa days, um, exceeding 183 days, and the companies are just not prepared to incur that cost.
00:29:48.579 -->
00:30:02.348Because remember, if that visa is canceled or deemed to be canceled, that renewal process is an obligation in the UAE on the employer, and that cost, um, you know, and the formal cancellation cost is that of the employer.
00:30:02.348 -->
00:30:09.808So I would suggest to make sure that there's absolutely no risk of a permanent establishment created by events like war, COVID-19.
00:30:09.808 -->
00:30:17.689So in our lifetime, we've now seen two of these events that triggers, that makes sure that that policy document also covers the negative.
00:30:17.689 -->
00:30:17.719Yeah.
00:30:17.719 -->
00:30:19.489Like in a divorce.
00:30:19.489 -->
00:30:23.419Ah, in a marriage, arrange the divorce rules in the antenuptial.
00:30:25.138 -->
00:30:25.358Yeah.
00:30:25.378 -->
00:30:32.919So what- so as an example, what happens if someone is on something called or s- or like maternity leave, right?
00:30:32.919 -->
00:30:36.140So you're actually not showing up to work every single day.
00:30:36.140 -->
00:30:43.415You're on maternity leave, but you then decide to take your maternity leave- In the UK or in Europe.
00:30:43.415 -->
00:30:53.516Obviously, there is no intention to get approval from your employer because they have approved you to be on maternity leave.
00:30:53.516 -->
00:31:03.326Does the location of where you enjoy that maternity leave have an implication on your tax status and/or the business tax status?
00:31:03.326 -->
00:31:11.450And is this something that we would need to see specifically included in the likes of these policies
00:31:11.450 -->
00:31:11.785that we've been talking about?
00:31:11.785 -->
00:31:18.145On, Carla, on the general guidance, no, it does not impact on the tax because you cannot make decisions.
00:31:18.145 -->
00:31:19.335You're on maternity leave.
00:31:19.335 -->
00:31:25.836Unless you're a very, very high senior person and they still keep you for, uh, board meetings or management meetings.
00:31:25.836 -->
00:31:35.115The second important part is to take into account that most double tax treaties use the word present in the country and exercising employment.
00:31:35.115 -->
00:31:41.684Whilst you're on maternity leave, um, or garden leave or a sabbatical, you are not exercising employment.
00:31:41.684 -->
00:31:44.214So that is critical to take that into account.
00:31:44.214 -->
00:31:45.755That's a very fine line.
00:31:45.755 -->
00:31:51.445Not all countries emphas- or place enough emphasis on that words, and they sometimes ignore it.
00:31:51.445 -->
00:31:56.455They just physically in the UK count the number of work days, whether you go into the office or not.
00:31:56.455 -->
00:32:02.195But you're truly entitled to claim that maternity leave was not in the exercising of employment.
00:32:03.704 -->
00:32:32.064I think, um, to add onto that, because the maternity leave is still considered as employment and you're still paid during at some level for, um, for your time off of, off of work, it's paid leave, um- I think it's worth to note from- for companies to have that question to be asked to somebody who's presenting with maternity leave, are you gonna be staying in the UK, in the UAE, or are you intending to travel to have the birth, and have that conversation.
00:32:32.064 -->
00:32:34.432And it will depend case by case.
00:32:34.432 -->
00:32:42.153There are, um, with the multicultural society that we live in, there are many that would choose to return home because they'll get better maternity cover benefits.
00:32:42.163 -->
00:32:43.623Can I give you, can I give you a real example?
00:32:43.623 -->
00:32:44.344Say- Oh,
00:32:44.383 -->
00:32:44.933please do.
00:32:45.094 -->
00:32:46.084Are you British or not?
00:32:46.084 -->
00:32:48.732Um, and, and sorry if I now upset the Brits.
00:32:48.732 -->
00:32:52.563The Brits has terrible rules about passports.
00:32:52.563 -->
00:33:06.153If your mother and your father are British passport holders, but neither were born in the UK, you are not entitled to a UK birth certificate and a UK passport unless you are born in the UK.
00:33:06.153 -->
00:33:16.542So therefore, and we have seen that, that some medical aides allow mothers from the UAE with British passports to fly out to the UK to have the birth there.
00:33:16.542 -->
00:33:22.032They then call on the employer to sign the so-called no objection certificate.
00:33:22.032 -->
00:33:23.492That's a letter of permission.
00:33:23.492 -->
00:33:24.032Mm-hmm.
00:33:24.032 -->
00:33:26.482And some of the medical aides actually contribute.
00:33:26.482 -->
00:33:30.202They won't pay all the costs, but they will contribute to certain of that cost.
00:33:30.202 -->
00:33:30.232Yeah.
00:33:30.232 -->
00:33:39.953So that is also very important that you keep that document, that you can show to a tax man who would like to try and tax you, that the intention was not to exercise employment.
00:33:39.953 -->
00:33:42.843There was another reason, which is not tax.
00:33:43.513 -->
00:33:43.782Mm-hmm.
00:33:43.782 -->
00:33:45.003No, no, very true.
00:33:45.003 -->
00:33:48.292This is- it's worth, um, uh, being aware of that.
00:33:48.292 -->
00:33:52.752And I think I would say to any employer to be on your toes about that type of thing.
00:33:52.752 -->
00:34:08.242Um, but also to any, um, anyone who's looking to start a family, start asking those questions before you make a choice about where you want to have the birth, if it's in the UK or South Africa or subcontinent or whatever, to understand the legal implications of that.
00:34:09.710 -->
00:34:27.190So from what it sounds like, the recommendation would be that albeit it may not trigger a tax consequence, it's a question or a process whereby you should notify your employer as to where you will be based throughout that duration and if that location changes.
00:34:27.190 -->
00:34:46.030So it's not necessarily about requiring approval, but I think approval follows equal importance around notification and staying in contact whilst you are on things like maternity leave with your employ- employer so that they can obviously make sure that they remain compliant, um, on your behalf as well.
00:34:46.030 -->
00:34:55.548So I guess this comes down to now, Sarah, through all of this, where does the decision or the ownership of this lie?
00:34:55.548 -->
00:35:05.818Would we expect this to be something that HR should own or are we expecting this as to something as that a business owner or a leadership team should be leaving, leading for their organization?
00:35:07.239 -->
00:35:12.849Sorry, just to clarify, in terms of the approvals for people taking maternity leave or the tax compliance?
00:35:13.699 -->
00:35:16.380So the overall remote working process.
00:35:16.380 -->
00:35:26.539Where would the ownership of that infrastructure, that policy development, the governance, the approval process, who would own that decision-making and that infrastructure creation?
00:35:26.539 -->
00:35:33.130Would we say that that's something that HR should lead or would we think that it's more so for business owners or leadership teams to govern?
00:35:34.134 -->
00:35:37.153I think it's a, um… it needs to be an informed decision.
00:35:37.153 -->
00:35:49.532So yes, HR plays a part, but I think, um, also, um, a general finance team, a legal team if there is one, compliance, um, get external legal and financial advice support on it.
00:35:49.532 -->
00:36:06.233Because for the most part, um, from all the experiences that I've had at least with, um, compliance and legal teams in-house, unless they've had actual experience of it, they don't generally have enough knowledge of it to be able to then put it into a policy, if that makes sense.
00:36:06.233 -->
00:36:08.753Because we tend to learn things by experience.
00:36:08.753 -->
00:36:17.474I mean, even whilst we're having these conversations, there's elements of things where I'm like, "I don't do that. Okay." Because it's not something that's come up in conversation.
00:36:17.474 -->
00:36:34.152So, um, I would be looking to gather information from a group of experts, and then propose it at a leadership level fo- so that everybody's on board and understands what the structure and format of that policy is and the approval matrix, and then disseminate that information down to the rest of the team once it's been decided upon.
00:36:34.813 -->
00:36:40.503Carlow, from an, a tax advisory point, we say to corporates it is a board level decision.
00:36:41.094 -->
00:36:41.393Uh-huh.
00:36:41.393 -->
00:36:47.273And HR is involved, as Sarah said, but often in the execution or just to find a policy.
00:36:47.273 -->
00:36:56.663But the initial permission must be at board level- Mm-hmm … because it's that board that takes ownership of the risk of a permanent establishment.
00:36:57.293 -->
00:36:57.592Mm-hmm.
00:36:57.592 -->
00:37:02.402And that is why the legal and tax advisory side belongs on that level.
00:37:02.402 -->
00:37:11.293So before a company, how small the company may be, make that decision to allow someone, they have to consider the tax treaty of the country where they- Yes
00:37:12.833 -->
00:37:13.052Yeah.
00:37:13.052 -->
00:37:15.384Not all companies are big enough to have a board here.
00:37:15.384 -->
00:37:16.733Majority are not.
00:37:16.733 -->
00:37:22.152Um, so it is from a senior leadership level and ownership level that they would be making that decision.
00:37:22.152 -->
00:37:23.503I 100% agree with you, Hugo.
00:37:24.992 -->
00:37:49.463So it sounds like the recommendation would be the initiation or the trigger should come from HR surrounding the employee benefit of remote working, but we're looking for contribution from the leadership team, from the board, from the business owner to really drive bringing in the right experts and making sure that that structure has covered all the potential risks associated with remote working.
00:37:50.132 -->
00:37:50.313Yep.
00:37:50.963 -->
00:37:56.293So if we have someone who's listening, and they're going, "I already have people working abroad.
00:37:56.293 -->
00:37:59.143Um, I haven't done any checks.
00:37:59.143 -->
00:38:00.773I haven't thought about this.
00:38:00.773 -->
00:38:13.083This was not a policy or a process that we've had in the past." To both of you, what would you say are the first three things they should do within the next week?
00:38:15.989 -->
00:38:16.480Go on, Hugo.
00:38:16.480 -->
00:38:17.628What's on your top three?
00:38:17.628 -->
00:38:17.849I'll
00:38:17.849 -->
00:38:17.989follow.
00:38:17.989 -->
00:38:22.648My, my first one is then to get the legal or corporate tax advice.
00:38:22.648 -->
00:38:25.378The second one is risk management.
00:38:25.378 -->
00:38:33.599Now, that's very wide, and I, example, um, have a company in South Africa, and I live six months a year in the UAE.
00:38:33.599 -->
00:39:08.739Part of my risk management was asking my, um, professional indemnity insurer, "Will you cover me whilst I'm working in the UAE performing South African tax advisory and compliance services?" And funny enough, they were very friendly and said, "Yeah, yes, your certificate included, but totally excluded are three jurisdictions." And the one was the USA, and the other one was India, and the third one was any country currently involved in a war, which by definition, for a period of time now excludes, uh, Israel and, and, um, America.
00:39:08.739 -->
00:39:20.429So and then the third one is getting the right permissions in place, whether that is from the employer or from the, um, uh, medical aid because there's also that cover.
00:39:20.429 -->
00:39:25.438Because if you're obliged to provide your employees with medical aid, that is a, a risk management item.
00:39:26.369 -->
00:39:32.079Mm. So from, from… The top three things for me would be to make sure you have all the data.
00:39:32.079 -->
00:39:32.728Who are they?
00:39:32.728 -->
00:39:33.349Where are they?
00:39:33.349 -->
00:39:34.389How long have they been there?
00:39:34.389 -->
00:39:36.768You know, is it from their first day of joining?
00:39:36.768 -->
00:39:39.099What, what is that timeframe looks like?
00:39:39.099 -->
00:39:46.759Because that's obviously then leads into any tax implications, both from a corporate perspective and from a personal, um, perspective.
00:39:46.759 -->
00:39:50.798So having all of that, looking at the data for visas as well.
00:39:50.798 -->
00:39:53.728I mean, hopefully you'll be aware of when people's visas are coming up.
00:39:53.728 -->
00:39:59.378That's one of the, the few things that, um, most HR departments are, um, pretty up to speed with.
00:39:59.378 -->
00:40:15.728Um, and then looking at the policies in place and, and trying to work out what that tax, um, implication might be, um, using the payroll information that you've got to figure out, okay, this person's been in the UK, so this is maybe what we might be looking at to be able to then mitigate that risk.
00:40:15.728 -->
00:40:31.458Um, and find out how you can, um, if necessary, call people back, um, to resolve that issue, um, or rearrange things and have that conversation, put them on a temporary m- suspension or, you know, whatever it might be just until it's resolved.
00:40:33.806 -->
00:40:57.766So if we look at all of this and businesses are going, "Okay, I need to take action." Um, Hugo, to you, obviously, I think the first thing, the first response that an SME business owner would say, you know, hearing all of this is, "How much is this gonna cost me, and can I use AI to fill the gap?" What would your recommendation to them be in terms of what are the options?
00:40:57.766 -->
00:41:07.074Um, everyone automatically wants to think or default to I can only go to the big four, or I'm going to use… So I'm going to use AI to reduce my costs.
00:41:07.074 -->
00:41:11.985What would you say to them in terms of what options they have out there that could be a lower cost?
00:41:13.085 -->
00:41:24.585Well, first of all, um, not necessarily lower cost, but the reliable value for money is to go to professional bodies like the various chartered accountant institutions across the world.
00:41:24.585 -->
00:41:31.085So, for example, I get a lot of work on the, from SAICA, the Institute of Chartered Accountants, or members of, uh, ICAEW.
00:41:31.085 -->
00:41:33.954And, um, I don't get all the work.
00:41:33.954 -->
00:41:42.344There's a rotational basis, but they have a list of who are the South Africans, uh, present in the UAE, and they go through the rotation list.
00:41:42.344 -->
00:41:45.574Because it's also, you must understand your industry.
00:41:45.574 -->
00:41:54.465So for example, if you are in the aviation industry, your employees by nature are going to be on your instruction outside.
00:41:54.465 -->
00:42:10.106Now you have no, um, option, but to incur that cost and build into your system a renewal for visas because you cannot put that pilot or crew on a staff, uh, on a, on a flight when they are three weeks away from a renewal date.
00:42:10.106 -->
00:42:19.184So there is certain software, even if you manage it through AI, but there are costs that are not necessarily advisory cost, but monitoring and compliance cost.
00:42:19.184 -->
00:42:24.635So my first answer, short answer, is go and find an expert of that country.
00:42:24.635 -->
00:42:33.434So where Sarah said that question, "Where, where are you going to?" is the first question, and follow that with if you do not know someone, and it need not be one of the big four.
00:42:33.434 -->
00:42:34.724The IOM is very small.
00:42:34.724 -->
00:42:35.784We're only five people.
00:42:35.784 -->
00:42:38.735They are experts in the field that can assist.
00:42:41.358 -->
00:42:48.737If the audi- audience member is listening to all of this can only take away one thing, what should it be?
00:42:48.737 -->
00:42:50.268Hugo, you go first.
00:42:51.137 -->
00:42:51.967Communication.
00:42:51.967 -->
00:43:08.487Inform your staff that if you are working remotely for whether it's a week, two weeks, three months, whatever your intention is, be transparent to us that we can manage our risk, and we will from our side try and, um, assist you in managing your risk.
00:43:08.487 -->
00:43:12.708So absolute transparency, and secondly is get a fair policy.
00:43:12.708 -->
00:43:13.416Yes or no.
00:43:15.398 -->
00:43:19.197And Sarah, what would you say is the one thing that you hope people could take away from today?
00:43:20.628 -->
00:43:28.467Um, I en- I encourage remote work, but, and there is a but, um, don't treat it as a casual perk.
00:43:28.467 -->
00:43:36.007Treat it as a governed exception that finance, HR, and leadership own together with simple rules and transparent communication to your teams.
00:43:41.880 -->
00:43:47.420Thank you so much, Hugo and Sarah, for sharing your exper- your expertise and practical insights for today.
00:43:47.420 -->
00:43:52.719Um, if we have a little bit more time, I wanted to ask, um, one or two more questions.
00:43:52.719 -->
00:44:04.048Um, would you consider that there is any difference through these circumstances whether someone is employed under a mainland or free zone entity?
00:44:04.048 -->
00:44:20.518Would there be a different consideration that a business should be taking into consideration if they are going, "But I am a free zone, and I have staff that sit remotely," or, "I'm a mainland entity, and I have staff that sit remotely"?
00:44:20.518 -->
00:44:32.230Do we want to point out that there is anything that should be different, or do people think that they- there is something different and that we can then go, "Actually, there isn't anything different"?
00:44:32.338 -->
00:44:33.048I will be quick.
00:44:33.048 -->
00:44:38.498From a UAE specific, specific, um, point of view, yes, a free zone.
00:44:38.498 -->
00:44:48.860If you only have less than seven employees, rather be free zone because your turnover level, the trigger for tax, corporate tax, is t- uh, 3 million dirhams.
00:44:48.860 -->
00:44:49.309Okay?
00:44:49.309 -->
00:44:52.599Rand terms, about 15 million, um, rand.
00:44:52.599 -->
00:44:59.789So it's a substantial level where in mainland there's not that availability, but then it must be a very small company, seven and less staff
00:45:01.454 -->
00:45:03.713So I think it's important… Yes, please, go Sarah.
00:45:03.713 -->
00:45:04.684Sorry, sorry, sorry.
00:45:04.684 -->
00:45:20.324I was just gonna say from an employee perspective, um, aside from the corporate tax, the difference between them, they're all, uh, with the exception of the two financial free zones being DIFC and ADGM, the rest of them are all governed under the same employment legislation as mainland.
00:45:20.324 -->
00:45:28.213So some of the free zones also have a WPS, but all of the free zones have a legislation of some kind and employment laws.
00:45:28.213 -->
00:45:39.264So irrespective of whether you are employed under a free zone or mainland and you're working remotely, you're still technically an employee of the UAE, and then everything that we've just said previously still applies.
00:45:39.264 -->
00:45:48.023So there's no get out clause if you hire, if you're on a free zone that the, you know, the, the, the, um, South African rules won't apply because it's a free zone in the UAE.
00:45:48.023 -->
00:45:49.532It doesn't work that way, unfortunately.
00:45:50.762 -->
00:46:01.273And I think that was important, you know, to highlight, because as business owners, I think it's very difficult for them to understand the difference between a mainland entity and a free zone entity because they are governed slightly differently.
00:46:01.273 -->
00:46:07.273But there is obviously alwa- always an overarching act that the UAE uses, um, to govern.
00:46:07.273 -->
00:46:25.043And I just heard that that question would come in from, you know, people listening to this to go, "But I'm a free zone. Does that still apply to me?" And I think both of you have answered that very clearly, that free zone or mainland, everything that we have discussed today is very much relevant, um, and applies regardless.
00:46:25.043 -->
00:46:30.693So thank you again, Sarah and Hugo, for sharing your expertise and practical insights with us today.
00:46:30.693 -->
00:46:38.512What has become very clear from our discussions is that international remote working is no longer simply an HR or an employee wellbeing issue.
00:46:38.512 -->
00:46:47.583It is a business-wide consideration that can have significant implications across tax, payroll, compliance, governance, and risk management.
00:46:47.583 -->
00:46:58.992As organizations continue to embrace that flexibility, it is increasingly important that policies, processes, and decision-making frameworks evolve alongside changing ways of working.
00:46:58.992 -->
00:47:13.202Today's conversation has certainly highlighted the value of taking a proactive approach, asking the right questions early, understanding the potential implications, and ensuring both businesses and employees are equipped to make informed decisions.
00:47:13.202 -->
00:47:18.842On behalf of Chartered Accountants Worldwide, I'd like to thank Hugo and Sarah for their valuable contributions.
00:47:18.842 -->
00:47:23.422And thank you all for joining us for this special edition of Difference Makers Discuss Live.
00:47:23.422 -->
00:47:30.253We hope today's discussion has provided practical guidance and useful considerations that you can take back to your own organizations.
00:47:30.253 -->
00:47:34.943Until next time, thank you for joining us and for continuing to make a difference
