In the Spotlight: Extended Business Travel
As companies continue to diversify their assignment types to meet talent and business objectives, Extended Business travel (EBT) is an increasingly popular solution for both temporary and ongoing business opportunities. Yet EBT can pose significant compliance risks for both travelling employees and their companies. Jennifer Patrona, Senior Vice President, Global Financial Operations, shares her insight on those risks and how BGRS’s travel risk assessment solutions respond to the issues.
Business travel poses a high potential for risk due to the potential for lack of compliance with tax and immigration issues. Can you describe why those risks exist?
Jennifer Patrona: Over the past years, as governments around the world have intensified their efforts to shore up tax revenues, tax and immigration compliance; or rather, the lack of it, has been an increasing issue. Business travelers are at particular risk due to the complexities involved with accurate travel tracking and reporting, which are essential in order to ensure adherence to the many different regulations involved. Technology advances are also making it easier for taxing authorities to track and catch transgressors, intensifying the situation. Yet many companies are not equipped to manage those risks.
What happens when companies fail to maintain compliance?
Jennifer: Lack of compliance can have severe repercussions. Travelers can unknowingly trigger individual tax obligations, causing financial penalties and accrued interest. Depending on the location and the traveler, both personal and corporate tax liabilities can be involved. And, significant financial impact is not the only risk: loss of employee productivity, barred entrance to a country, negative impact on business goals and brand reputation risk to companies can all be involved.
What are the challenges that companies face when it comes mitigating risk involved with business travel?
Jennifer: There are several. First, many companies don’t have an Extended Business Traveler (EBT) policy in place to cover the most at-risk employees. Second, the complexity of tax and immigration laws is increasing, with almost every jurisdiction having a different set of applicable laws.
A current example is the European Parliament’s agreement last year on the establishment of the European Travel Information and Authorization System (ETIAS) in 2021. The ETIAS is a visa waiver pre-screening program for all travelers under the EU visa-free program that want to enter any of the EU countries. It’s similar to the US Electronic System for Travel Authorization and primary purpose is the protection of EU borders.
The stakes for companies are also being raised by Duty of Care responsibilities, which add another set of mandates for companies attempting to provide safe environments for their traveling employees.
What role does mobility play in mitigating risk and managing compliance with EBT?
Jennifer: While mobility managers can develop and implement EBT policies, they still face many impediments to helping their organizations manage risk. On top of that, travel decisions are often generated within the business, outside of the purview of mobility, so that mobility managers do not have a chance to signal the potential risks and precautions that should be taken. Compounding the situation is that the ultimate risks, potential fines and penalties from tax or immigration non-compliance, are the responsibility of tax or legal departments; the risks may not be as readily understood by other functions, and the need for precautionary measures even less so.
How does BGRS’s business travel risk management solution, TripWise, support our clients’ compliance needs?
Jennifer: Essentially, TripWise is a solution that combines technology and personal guidance to help companies understand, manage and mitigate the risks posed by business travel. It allows companies a holistic view of global business traveler compliance risk, so it captures risk posed by U.S. Domestic travel as well as international. The solution has a tracking function, integrated with company travel providers, to feed data on employees’ travel patterns. It incorporates up to the minute information, so that at the onset of travel, alerts are issued if potential risks exist, and managers are also alerted on an ongoing basis if risks emerge during the travel itinerary. In addition to detailed travel activity reporting, managers get information on real-time travel trends, such as immigration assessments. The full service offering of TripWise provides ongoing traveler support, initiation of services with internal owners and immigration and tax providers. Thus, BGRS can play an integral role in linking mobility, tax and travel resources within the company
TripWise is an effective way for managers to evaluate best practices as well – in one case, for example, a business unit sending people on EBT realized that a better approach would be to send them on short term assignments, which would eliminate many of the risk factors with better management controls.