By the year 2020, almost 20% of workers will be contingent workers, with the number expected to rise to 50% by 2030.
Gig workers can greatly complicate tax issues for countries and companies. It’s important for companies to stay ahead of the issue to avoid surprises and changes in tax law.
Mike Bertolino, EY Global People Advisory Services Leader, describes an increasingly common scenario.
“How do you track costs when a contingent worker lives in one country, electronically provides services on behalf of a company in a different jurisdiction for a client located in a third jurisdiction,” he says. “What if the contingent worker is traveling to different countries when offering these services?”
Adds Tony Steadman, EY Americas People Advisory Services Organizational Transformation Leader, “By the year 2020, we estimate that about one in five contingent workers will be available or actually in use in any different employer/employee population. And by 2030, about half of the workforce, half of the supply of talent, will actually be giggers.”
Mike recounts an engagement with a client that uses 1,000 contractors in a particular jurisdiction.
“These workers aren’t employees under current rules,” he says. “However, the rules are changing, and they’re changing quickly.
“If the workers were all to be considered employees, the company estimates possible withholding tax liabilities of up to the equivalent of $70 million a year. We’re helping the company analyze which of these gig workers would be considered employees under evolving rules, and we’re also working with the tax authorities to develop a common understanding of how to classify these workers.
“We’re helping the company to develop a process,” Mike says, “that remains robust and compliant as the rules continue to change.”
Watch more in our video series on the future of tax