Innovative Approaches to Automating Mobility Administration

Transcription

1 Innovative Approaches to Automating Mobility Administration SPEAKERS Kathi Greene, Director Executive Compensation, Phillips 66 (US) Robert Hayter, Asst Gen Counsel, Halliburton (US) Leann Balbona, Tax Managing Director, KPMG LLP (US)

2 ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY KPMG TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN. You (and your employees, representatives, or agents) may disclose to any and all persons, without limitation, the tax treatment or tax structure, or both, of any transaction described in the associated materials we provide to you, including, but not limited to, any tax opinions, memoranda, or other tax analyses contained in those materials. The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.

3 Agenda Introductions Business Problem and Participants Impacted Corporate Issuers: Approaches to Complex Situations Process Overview Lessons Learned

4 Bringing Tax to the Table What s for Lunch?

5 Current Environment Taxing Authorities Need Money Rules on the Books Mobile Employees

6 Challenges of Data New Process Owner for Process Systems Complexity Resources

7 Hypothetical vs. Actual Tax US citizen transferred to India and then repatriating to the US Grant date 1 Jan 2013 US India US Transfer date 1 Jan 2014 Repatriation 1 Jan 2017 Final vesting date 1 Jan 2018 Income subject to US reporting US hypothetical tax withheld on full amount reported for US income tax purposes* US income taxes remitted for pre-transfer portion of award No US taxes remitted due to mandatory foreign withholding Income subject to Indian reporting For transitory residents India will only require reporting based on the number of days spent in that country over the period from grant to vest. US income taxes remitted for post-transfer portion of award 100 RSUs Awarded Taxes remitted to India Because 3 of the 5 years of the vesting period was spent in India, 3/5 (or $6,000 in this example) of the award will be subject to Indian tax withholding RSU Value at Vest $10,000 RSU Value at Vest India $10,105 Both India and the United States will seek * Example assumes a US citizen to tax the award on the Vesting date** ** While the US will tax the RSU at settlement, in this example assume that awards are settled on the vesting date

8 Example of Withholding By Vesting Tranche* Grant date 1 Jan 2013 Transfer date Repatriation 1 Jan Jan 2017 US India US 1 st Vest 1 Jan nd Vest 1 Jan rd Vest 1 Jan th Vest 1 Jan th Vest 1 Jan 2018 Entire 1 st tranche of 20 RSUs subject to US tax at vest Entire award taxable in the US at vest. ½ of the award is sourced to the US 1/2 of 2 nd tranche (10 RSUs) subject to Indian reporting and withholding Entire award taxable in the US at vest 2/3 of 3 1/3 of award (6.67 RSUs) sourced to the nd tranche (13.33 RSUs) subject to Indian reporting and withholding on the vesting date US. Entire award taxable in the US at vest 1/4of award (5 RSUs) sourced to the US. 3/4 of 4 th tranche (15 RSUs) subject to Indian reporting and withholding on the vesting date Entire award taxable in the US at vest 1/5 of award (4RSUs) sourced to the US. 3/5 of 5 th tranche (12 RSUs) subject to Indian reporting and withholding on the vesting date Additional 1/5 of a ward (4 RSUs) sourced to the US 100 RSUs Awarded Income subject to US reporting & withholding US citizens are subject to US tax on their world wide income. Reporting will be required for all income derived from RSU vests regardless of residency. US withholding will only be required on US sourced RSU income due to mandatory foreign withholding in India. Income subject to Indian reporting & withholding For transitory residents India will only require reporting And withholding based on the number of days spent in that country over the period from grant to vest. * Example assumes a US citizen and expectation is that the Indian tax would offset the US withholding so the net amount due is less than 25% supplemental tax rate (<$1MM supplemental wages).

9 CORPORATE ISSUERS

10 One of the world's largest providers of products and services to the oil and gas industry More than 72,000 people, representing 140 nationalities in approximately 80 countries 13 product service lines in 2 divisions Completion and Production Drilling and Evaluation

11 Equity In 2012, Halliburton granted over 2.2M shares of Restricted Stock and Options to 10,000 global employees Halliburton grants equity in over 55 countries across the globe Mobility RSAs in the US RSUs in 61 Countries Options in 59 Countries All employees are eligible for equity either through the annual or semi-monthly grant process 1,100 Commuters on Short-term Rotational Assignments; no tax equalization 1,500 Expatriates on Short and Long-term Assignments; tax equalized

12 Beyond Mobility Finding a Solution for Halliburton s Global Equity Tax Compliance Challenges Multi-year, multi-function process to select a provider with global equity tax expertise who could provide proven results in process automation and technology integration Identified solution for mobile employees that also works for our global non-mobile employees in an effort to ensure compliance in all jurisdictions

13 May 2012 demerged (PSX) Energy manufacturing and logistics: refining, marketing, midstream and chemicals businesses operating globally Approximately 13,500 employees Active in more than 15 countries

14 Equity plans continued Clone and go Complexities of the demerger 2 stocks Valued all equity and impact to taxability at the spin and impact outside the U.S. Our approach to tax compliance

15 Design Approaches Option CLIENT system(s) Option 2 CLIENT Option system(s) 2 EE, payroll, mobility, and award data Tax results EE, payroll, mobility, and award data Tax results SPA SPA EE, payroll, mobility, and award data Tax results EE, payroll, mobility, and award data Tax results KPMG GET DP KPMG Demographics Mobility data KPMG GET DP Option 3 SPA CLIENT system(s) EE, Payroll, and mobility data Tax results Award Data KPMG GET DP

16 Automation critical Volume Time saver Payroll accuracy and timeliness MSW GAAP concept Tax rates for all participants Evaluation of impact on permanent transfers/commuters

17 Stakeholders IT/HRIS Legal Tax HR Mobility Employee Finance Equity Share Plan Admin Payrolls

18 Lessons Learned Investigate current state stakeholder processes Understand IT scheduling and budget process Determine SPA release schedule Consider utilizing a formal Steering Committee Scope project appropriately Design for 90 95%

19 Thank you Kathi Greene Robert Hayter Leann Balbona