Statutory Account Setup
When you are expanding your business into another country or setting up a business from the ground up somewhere other than your home country, you are bound to face certain challenges. You will need to get around the language barrier, understand local taxation, banking policies, and local corporate culture if you want to attract the best talent at reasonable compensations. But in order to attract the best or at least optimal local talent, you have to offer them almost all the perks and benefits that are a common part of the employment package, and statutory insurances and local social security benefits are an important part of this package.
Navigating The Statutory Social Account Registration Terrain
Every country has a different corporate culture and job market trends. These trends and cultures are sometimes even difficult to understand compared to compliance regulations because they are not codified the same way. For example, in the home country of your business, it might be mandatory for an employee to pay into the social security program or mandatory medical insurance. But in the country you are expanding to, the culture might be different. Employees might prefer to opt-out of national medical insurance and pay for a private one.
That’s just one of the challenges associated with statutory social account registration. Other challenges might include:
- Understanding whether or not your business qualifies for certain local social service accounts and insurances. A country might have different social security requirements for local and foreign business entities. And within a country, states/provinces might have different rules.
- It’s worth running a cost-benefit analysis on whether investing in making your business qualify for statutory social account registration or you can simply pay a lavish salary to attract the right local talent. The latter might be a better option for companies seeking short-term or experimental expansions.
- Not all of your employees might be eligible for, thus require local social security benefits. In UAE, for example, you might be mandated to match a national employee’s social security benefits but not an expat’s.
- Countries like India and Singapore still run provident funds for their employees. They might seem similar to 401(k)s in the US, but they are slightly different and might require registering with a government body as well as partnering up with a local bank to run the program.
- Statutory insurance practices are different for every country. Some require employers to only register with the country and withhold a sum from employee’s compensation to be paid to the state. Others might require employers to also pay into a private insurance program so they can offer more comprehensive coverage to their employees. Understanding the statutory insurance practices of the country you are expanding to is crucial if you don’t want to get penalized or run your operational cost too high.
Labor laws, government-mandated benefits, and actual corporate trends are not always in perfect harmony in every country. And to make matters worse, they are almost always changing. Figuring out statutory social account registration requirements just once might not be enough. You have to keep an eye out on the ever-changing regulations, and that’s difficult (if not nearly impossible) to do with trustworthy local resources or global expansion firms that specialize in that area.