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The presentation will begin shortly. Audio will be streamed directly via your computer speakers. Enjoy the webcast! 2016 Concur, all rights reserved.

1 The presentation will begin shortly. Audio will be streamed directly via your computer speakers. Enjoy the webcast! 2016 Concur, all rights reserved. Concur is a registered trademark of Concur Technologies, Inc. All other company and product names are the property of their respective manufacturers. Specifications and other details listed are accurate as of printing, but may change without notice.

2 How to Simplify Business Traveler Tax & Payroll Compliance John Jennings, Partner at Deloitte Nishant Mittal, Co-Founder at Monaeo

3 Today s Agenda What are the tax issues created by business travel? What can you do? How do organization s address these risks? How can you leverage technology? Q&A

4 Today s focus: business travel Who are business travelers? What risks do they create? Employer Employee Payroll, income and social tax Tax filings Individuals traveling away from their primary work location to perform their job responsibilities. These employees are not on an expatriate assignment where their primary work location and tax home changes. Compensation is typically delivered from the home country employer and may include per diems and/or expense reimbursements for items, such as travel, accommodation, meals, incidentals, etc. They typically do not cease their residency in their home country or state jurisdiction and, in most cases, family members do not travel with the employee. Corporate tax Reputation Commercial Labor law Immigration Talent retention Income and social tax After-tax pay Immigration Employee experience Copyright 2017 Deloitte Development LLC. All rights reserved.

5 Why focus now? Decreased revenue bases Decreasing revenue bases, along with technological improvements, may create enhanced capacity and more aggressive behavior by tax authorities during audits, stricter enforcement of legislation and less leniency in the negotiation of settlements and/or assessment of penalties. Decreases in company revenues result in less resources, technological and personnel, available to monitor and facilitate compliant operations. Increased audit risk Continuously changing regulations Challenge to keep current on constantly changing legislation, which increases exponentially as mobility creates need to understand interaction of regulations across jurisdictions. Legislative updates Compliance program Acceptable risk profile Increased scrutiny Public scrutiny (media & institutional shareholders) Commercial impact of negative publicity regarding non-compliant behaviors can have greater impact than fines/penalties assessed by regulators. Copyright 2017 Deloitte Development LLC. All rights reserved. Management s risk tolerance Changes in management accountability and disclosure requirements have changed C-suite s perspective on what constitutes acceptable risk. Changing demographics for mobile employees impacts areas of focus.

6 Hurdles to better governance Unquantified risks, unknown benefits Lack of knowledge of applicable regulations Inability to identify travel No major impetus for change No function owns business travel Copyright 2017 Deloitte Development LLC. All rights reserved.

8 Poll question #1 Does your organization have visibility into who is traveling for work, where and for how long? No Yes, but it is manual Yes, and it is automated Don t know Copyright 2017 Deloitte Development LLC. All rights reserved. 8

10 Hurdle: Create an effective team Project Sponsor Project Lead HR Operations Promote Leadership s support of the initiative Approve acceptable risk tolerance level Communicate success of program Establish policies, protocols and processes Provide program governance Liaise with Leadership team Communicate program policies Drive effective deployment strategies Manage employee expectations, on-board new employees Payroll/Finance Compensation & benefits Legal/Immigration Audit defense readiness (Payroll) Reduce payroll tax exposures (Payroll) Budget for costs arising from business travel program (Finance) Tax Internal Audit Employee Travelers Manage state nexus and permanent establishment risks Opportunities to proactively manage indirect tax costs Establish standard benefits for travelers (travel insurance, emergency medical, SOS, etc.) Determine compensation adjustments to meet minimum wage requirements Understand the materiality of the risk External and regulatory audit readiness Drive accountability and reporting Manage immigration risk Provide immigration support to travelers including visa and work permit acquisition Protect reputation of enterprise Understand rationale for change Reduce personal exposures Minimal additional administration, remain focus on core business A cross-functional team is a critical success factor. You can create momentum for change by educating others that hurdles can be overcome. Copyright 2017 Deloitte Development LLC. All rights reserved. 12

11 Hurdle: Develop a business travel program Execute Design Conduct testing Understand Develop project work plan, governance structure, and compliance guidelines Targeted communications tailored to stakeholder groups and training on new procedures Meet as a project team to develop understanding of current state Choreograph and document data flows and supporting processes Launch business travel program, execute new processes Conduct risk assessment and review results Develop communication strategy and messaging for each stakeholder group Solicit feedback, review results and adjust as required to optimize program Define acceptable risk tolerance levels and conduct economic modelling Validate proposed solution with broader team, adjust as required Identify impacted stakeholders Copyright 2017 Deloitte Development LLC. All rights reserved.

12 Poll question #2 Does your organization have a process to manage tax and payroll risks created by business travelers? No Yes, but it is manual Yes, and it is fully automated Don t know Copyright 2017 Deloitte Development LLC. All rights reserved. 12

13 Risk assessment report Provide insights into the volume and patterns of the business travel Summary based upon 12 months of hotel expense data Observation Number Number of distinct (International and Domestic) Top international destinations (by number of travelers) Top domestic destinations (by number of travelers) Top international routes (by number of travelers) Top domestic routes (by number of travelers) International business travelers International trips International travel days Domestic business travelers Domestic trips Domestic travel days Canada Germany Netherlands France United Kingdom Wisconsin Georgia Arkansas Ohio Texas United States to Canada United States to UK United States to Mexico Illinois to Wisconsin Illinois to Georgia Illinois to Ohio 4,110 31, ,865 5,280 48, ,040 1,410 1,140 1, ,190 1,770 1,620 1,590 1,470 1,410 1, ,010 1,470 1,380 Copyright 2017 Deloitte Development LLC. All rights reserved.

Risk assessment report Create visibility to the income tax liabilities of employees that travel International Destinations Unallocated Compensation Estimated Income Tax Exposure % of Exposure

$50,625 $15,188 3% Total $1,381,163 $448,545 100% 5% of international business travelers triggered a tax liability in at least one additional jurisdiction Number of international travelers triggering

$3,511,000 $245,770 14% Wisconsin $1,627,338 $124,491 7% Georgia $2,064,538 $123,872 7% Oklahoma $1,827,450 $95,941 5% Pennsylvania $2,200,838 $67,566 4% All Others $11,936,675 $727,351 41% Total

14 Risk assessment report Create visibility to the income tax liabilities of employees that travel International Destinations Unallocated Compensation Estimated Income Tax Exposure % of Exposure Argentina $456,538 $159,788 36% Colombia $294,225 $97,094 22% South Korea $187,500 $71,250 16% United States $110,363 $43,704 10% Chile $76,938 $30,775 7% Costa Rica $204,975 $30,746 7% Uruguay $50,625 $15,188 3% Total $1,381,163 $448, % 5% of international business travelers triggered a tax liability in at least one additional jurisdiction Number of international travelers triggering personal income tax liabilities Domestic Destinations Unallocated Compensation Estimated Income Tax Exposure % of Tax Exposure California $3,326,013 $409,100 23% Arkansas $3,511,000 $245,770 14% Wisconsin $1,627,338 $124,491 7% Georgia $2,064,538 $123,872 7% Oklahoma $1,827,450 $95,941 5% Pennsylvania $2,200,838 $67,566 4% All Others $11,936,675 $727,351 41% Total $26,493,840 $1,794, % Number of domestic travelers triggering personal income tax liabilities 74% of domestic business travelers triggered a tax liability in at least one additional jurisdiction Copyright 2017 Deloitte Development LLC. All rights reserved.

15 Risk assessment report Understand the impact of establishing a threshold for taking action International Travel Duration Impacted Employees % of Impacted Employees Projected Tax Exposure % of Total Projected Tax Exposure All taxable travel % $448, % Travelers > than 5 work days in one location % $303,810 68% Travelers > than 10 work days in one location % $147,420 33% Travelers > than 15 work days in one location 30 3% $66,630 15% Travelers > than 20 work days in one location 30 3% $66,630 15% Domestic Travel Duration Impacted Employees % of Impacted Employees Projected Tax Exposure % of Total Projected Tax Exposure All taxable travel 11, % $1,794, % Travelers > than 5 work days in one location 2,730 24% $1,208,280 67% Travelers > than 10 work days in one location 1,650 14% $887,760 49% Travelers > than 15 work days in one location 1,320 11% $698,430 39% Travelers > than 20 work days in one location 870 8% $430,650 24% Copyright 2017 Deloitte Development LLC. All rights reserved.

16 Risk assessment report Identify opportunities for exemptions or refunds from indirect taxes City Nights Spent Average Cost Per Night (USD) Hotel Occupancy Tax Rate Hotel Occupancy Taxes Paid (USD) Residency Day Threshold Number of Rooms Satisfying Day Threshold Potential Hotel Occupancy Tax Refund Opportunity (USD) Boston 3, % 109, ,000 Chicago 7, % 351, ,000 New York 12, % (NYS) 5.875% (NYC) 765, (NYS) 180 (NYC) ,000 San Francisco % 44, ,000 Washington D.C % 15, Copyright 2017 Deloitte Development LLC. All rights reserved.

Concur: a valuable data source - Pre-built API connection - Short implementation -

Doing it manually is painful Multiple locations/day

Business traveler tracking Payroll withholding Permanent establishmen t Stock compensation Expat

workflow C. WORKFLOW AUTOMATION triggers, informs action B.

LOCATION ENGINE creates a referenceable location & travel data store (i.e. system-of-record ) 2017 Monaeo, Inc.

19 Business traveler tracking Payroll withholding Permanent establishmen t Stock compensation Expat tracking Ghost expats Appendix 4/other filing Residency tracking Goal: streamlined & automated workflow C. WORKFLOW AUTOMATION triggers, informs action B. CONTEXT & ANALYTICS ENGINE figures out the so what (use case-specific) A. LOCATION ENGINE creates a referenceable location & travel data store (i.e. system-of-record ) 2017 Monaeo, Inc. All rights reserved OTHER Timesheets VPN, IP Badge swipes Corporate jets Mobile, laptop app CONTEXT HR demographics Activity Entities Other RULES Statutory rules Business policies

Transforming insights actions Automated feed

24 Poll question #3 Would an automated solution enable your organization to increase business traveler tax and payroll compliance? Yes No Copyright 2017 Deloitte Development LLC. All rights reserved. 24

25 Q&A

26 About this presentation This presentation contains general information only and the respective speakers and their firms are not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. The respective speakers and their firms shall not be responsible for any loss sustained by any person who relies on this presentation. Copyright 2017 Deloitte Development LLC. All rights reserved. 23

Designing Global Payroll and Benefit Programs. Fatima Laher and Maria Tsatas Deloitte LLP Randy Hahn Guberman Garson Segal LLP

Designing Global Payroll and Benefit Programs Fatima Laher and Maria Tsatas Deloitte LLP Randy Hahn Guberman Garson Segal LLP Agenda Evolving Payroll and Immigration landscape The Payroll Gap Analysis: