English accounting practice Blick Rothenberg conducted a study of international tax practitioners around the world in collaboration with the Exeter Business School and international accounting group BKR International.
The report, titled Taxation of Internationally Mobile Executives (TIME), found that internationally mobile employees often have to pay double tax, complex tax treaties leave them out of pocket and there is a lack of clarity on pensions and social security payments.
“The study shows that the current global tax system has a number of challenges and potential barriers at a time when business and political leaders are extolling the virtues of globalisation and international trade deals,” said Mark Abbs, partner and head of expatriate tax services at Blick Rothenberg.
Mr Abbs said the differences in tax systems between different countries, including Australia, is the cause of these issues.
“The tax and social security systems in individual countries are the product of long history, adaptation to worldwide developments and political, cultural and social considerations,” Mr Abbs said.
“While there are similarities between each set of rules and practices, the detail varies significantly from country to country.”
Mr Abbs said that governments around the world need to review their tax systems and ensure that they aren’t contributing to this problem.
“We should encourage governments to use tax policy as a tool to make it easier and less complex for internationally mobile executives to work across borders,” he said.
“Tax policy has a clear role to play in making it easier for employees to be mobile and paving the way for strong, sustainable growth, particularly now with the unprecedented growth in the number of employees working outside their home countries.”
He added: “Changes to tax treaties are long overdue so that they are more efficient at avoiding double tax. It is also critical that we move to a universal tax measurement or index to help mobility.”