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Business Officer Magazine
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What You Need to Know About International Compliance

A U.S. institution operating overseas invites scrutiny both within the United States and in the host country. And when an American institution is operating in several countries it gets very complicated very quickly, said Scott Vanlandingham, managing director for advisory services with RSM McGladrey, a tax and consulting services firm.

In a session titled "International Compliance Risks and Best Practices: A Case Study," presenters discussed what U.S. institutions need to know and do to stay in compliance with the various laws and regulations of the countries in which they operate. The session was led by Vanlandingham, along with Sunanda Holmes, global compliance officer at the Johns Hopkins University, Baltimore, and Larry Leblanc, RSM McGladrey managing director for international tax.

Operating overseas means complying with three sets of laws: host country laws (banking, labor laws, HR manuals, payroll administration, taxes, work permits, insurance, benefits administration, and so on); U.S. laws (employment laws, anti-boycott laws, export control, intellectual property laws, and the like); and U.S reporting requirements (Higher Education Act of 1965, BE-125, Form 990 Schedule F, IRS Form 5713, and more). An institution must also be familiar with applicable rules and regulations of the U.S. Agency for International Development.

When establishing presence in another country, institutions must be aware that hiring employees, leasing office space, signing agreements, and conducting business activities in the host country all have tax implications. Furthermore, just because a university is tax-exempt in the United States does not mean it will be tax-exempt in other countries, nor is it safe to assume that the university is automatically nontaxable in the foreign country because of a tax treaty or a bilateral agreement. Agreements are country-specific, so read them carefully.

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