Feature Article - November/December 2017

The Challenge of Going Global

Incentives & Rewards Around the World

By Rick Dandes

Currencies, Customs, Tariffs and Taxes

If your organization is already conducting business in the countries where you will be introducing an incentive program, the odds are that internal corporate procedures exist to work with foreign currencies.

If not, Smith said, " get someone from your finance team to work with you in this area. If you're working with a local award provider in a country, it's important to establish in which currency you will be invoiced, which currency will be used for payment, what currency conversion rate will be utilized and what method (if any) will be utilized to 'true-up' expenditures to address currency exchange rate fluctuations over time."

If your program also includes gift cards or cash as award choices, Smith continued, establish how you'll handle award values as currency rate fluctuations occur, if those fluctuations will impact the face value of the gift cards or cash awards.

Depending on where your company is based and which other countries will be included in your performance or recognition program, awards shipped to participants may have to clear customs and be subjected to taxes and tariffs.

Clearing customs will undoubtedly delay the arrival of the award, so expectations should be managed in this regard, Smith said. Also, customs regulations impose restrictions on items and materials that aren't allowed to enter the country. Check to ensure that restricted materials are not included, so they will not be barred from entry. Avoid award selections that will be confiscated.

Import taxes and tariffs can be costly depending on the imported item and the country involved, Smith said. "It's not unusual for the taxes to exceed the actual value of the award itself, so factoring tax implications into your award selection process could prove to be a very worthwhile endeavor. Unless you clearly state in your shipping documents that these taxes and tariffs are to be charged back to your organization, the recipient will be liable for payment of the taxes and their award will not be released to them until the charges are paid in full."

This discovery, Smith warned, can be an unpleasant surprise for the recipient and may result in the recipient refusing to claim the award for lack of desire to pay the taxes.

Although technology can't save you from taxes or cultural idiosyncrasies, there's a great deal that it can do to help you create an engaging, cost-effective, flexible and easy to administer global incentive or recognition program.

"In today's business climate," Smith said, "company goals often shift so frequently that employees aren't always sure what's expected of them on an individual level. This uncertainly is magnified when you're dealing with a variety of business units that cross borders. Mobile and online incentive solutions provide a quick and consistent method for communicating information to employees, and allow your program to continue to evolve at the same speed as your business."

While moving a program across a border can be a challenge, don't ignore the opportunity to gain a competitive edge in the marketplace, Smith concluded. "It can literally mean the difference between thriving as a company and perhaps ceasing to exist."