How a future-proof payroll operation should look

EY Global Payroll Operate Leader Sheri Sullivan and colleagues Marjukka Maki-Hokkonen and Olivia Yeoh describe the future of tax and payroll.

As nations more rapidly change their laws around payroll, multinational companies increasingly want a single provider to handle their payroll operations worldwide, not a tangle of country-specific or regional providers who use a variety of incompatible technologies and processes.

Many of the new laws around payroll are driven by advancing digital technologies that enable tax authorities to more closely monitor payroll tax collection. They are particularly concerned about business travelers, contingent workers and employees’ immigration status, although there is a host of other issues that are making payroll administration and correct tax withholding more difficult. And it’s not just at the national level that complexity around payroll data and tax withholding is increasing; it’s also in the tens of thousands of subnational jurisdictions.

As a result, payroll tax withholding calculations are changing almost daily, and taxpayers need the same sophisticated data analytics around their payroll administration that the tax authorities are using.


Summary

New laws and more sophisticated technology are increasing the scrutiny by tax authorities on payroll tax collection. Complexity at national and subnational levels is also on the rise. As a result, companies are looking for a single provider to handle their global payroll operations.