Overseas Worker Classification – Using Local Experts

“Globally, the US enjoys a lower personal tax burden than most countries, however our system is more complex especially when it comes to Project-Based workers and Small Businesses.  A major reason is outside the US, countries favor their workers to be treated the same from a tax liability sense and also contribute equally to social programs.  While it may be easy to imagine from these words, overseas worker classifications can be challenging from a tax collection and reporting standpoint, where local experts can kindly navigate the waters and take the compliance risk off the hands of multinational companies” – Lou Calamaras, CCWP, Global Client Solutions Director, CXC Global North America.

The tax rates in the U.S. will be lower next year, thanks to the new Republican tax plan. Currently, the seven tax brackets are 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent and 39.6 percent. The new rates, which relate to the tax return you’ll file in 2019, will be 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent.

How do these rates compare to other countries?

According to a research paper published by the Federal Reserve Bank of Chicago, “the U.S. is a relatively lightly taxed country.” In fact, of the 35 OECD countries, the U.S. ranks 32nd in total tax burden, a measurement that includes income, property and various other taxes.

The low tax burden in the U.S. is driven by “low taxes on personal income,” the Chicago Fed notes, “and not, for the most part, by lower taxes on business and property income per se.” The U.S. corporate tax rate used to be among the highest in the world, at 35 percent. The new GOP tax law lowered it to 21 percent.

While the U.S. enjoys relatively low taxes, Americans do have to navigate one of the most complex filing systems in the world.

And, as a 2018 study from GOBankingRates points out, there are still a handful of countries that pay even less in taxes.

Here are 12 countries that have lower income tax rates than the U.S., which had a top rate of 39.6 percent in 2017. We also included the corporate rate in each country. All data is for 2017 and comes from tax advisory service KPMG.

Mexico

Highest individual income tax rate: 35 percent
Corporate tax rate: 30 percent

Thailand

Highest individual income tax rate: 35 percent
Corporate tax rate: 20 percent

Canada

Highest individual income tax rate: 33 percent
Corporate tax rate: 26.5 percent

These are the countries where expats earn more than they would at home

New Zealand

Highest individual income tax rate: 33 percent
Corporate tax rate: 28 percent

Poland

Highest individual income tax rate: 32 percent
Corporate tax rate: 19 percent

Kenya

Highest individual income tax rate: 30 percent
Corporate tax rate: 30 percent

Albania

Highest individual income tax rate: 23 percent
Corporate tax rate: 15 percent

Latvia

Highest individual income tax rate: 23 percent
Corporate tax rate: 15 percent

Singapore

Highest individual income tax rate: 22 percent
Corporate tax rate: 17 percent

Czech Republic

Highest individual income tax rate: 22 percent
Corporate tax rate: 19 percent

Ukraine

Highest individual income tax rate: 18 percent
Corporate tax rate: 18 percent

Hungary

Highest individual income tax rate: 15 percent
Corporate tax rate: 9 percent

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Talk to the CXC Global team!

CXC Global assists companies to navigate the challenge of overseas worker classifications from a tax collection and reporting standpoint for project-based workers and act as the local experts taking the compliance risk off the hands of multinational companies.

Contact us to talk to one of our experts or contact Lou directly.

 

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