Compliance strategies for going global

Joyce Lau FCG HKFCG, Head of Financial Accounting and Tax Services, Vistra Greater China, first examined one of the most fundamental aspects of overseas expansion – establishing accounting and tax compliance across multiple jurisdictions.

Drawing on her experience of advising Chinese enterprises expanding internationally, Ms Lau noted that overseas growth is typically gradual. Companies often begin by testing new markets with a small business presence before establishing local operations and hiring service providers to manage accounting and tax matters. As operations expand, however, fragmented compliance arrangements can quickly become difficult to manage.

‘We often see companies developing step by step,’ she explained. ‘Local service providers may be sufficient in the beginning, but as the business grows, the complexity of managing tax and accounting compliance increases significantly.’

One of the most pressing issues, she pointed out, is the shortage of qualified accounting and tax professionals in many markets. ‘Finding young and experienced accounting and tax professionals has become increasingly difficult in many jurisdictions,’ she revealed. ‘If companies cannot recruit suitable local talent, that will directly affect their ability to maintain financial reporting and tax compliance.’

Talent shortages are only one part of the equation. Every jurisdiction applies its own accounting standards, tax rules and filing requirements, creating significant challenges for headquarters attempting to consolidate financial information across various overseas subsidiaries.

Although the adoption of the International Financial Reporting Standards (IFRS) has become more widespread globally, Ms Lau emphasised that local accounting standards continue to differ substantially in many jurisdictions. These differences may appear manageable in the early stages of expansion, but often accumulate over time, particularly where overseas subsidiaries report under local standards while headquarters prepares consolidated accounts under another framework.

‘At a certain point, the differences become too significant for auditors to ignore,’ she said. ‘Companies then need to spend considerable time reconciling those differences.’

Tax compliance presents an equally demanding landscape. Even seemingly familiar concepts such as value-added tax (VAT) can vary considerably between jurisdictions.

Ms Lau cited an example from a recent project in Spain, where different product categories were subject to different VAT treatments, while additional EU reporting obligations further increased compliance complexity.

‘Many companies assume VAT is straightforward because they are already familiar with it,’ she commented. ‘But once they enter another jurisdiction, they discover different rates, additional reporting requirements and other local obligations.’

As businesses expand into a number of countries, compliance challenges extend well beyond accounting standards and tax legislation. Companies must also coordinate local service providers, maintain consistent reporting standards and ensure information flows efficiently between overseas operations and headquarters.

Ms Lau noted that many organisations continue to rely heavily on local accounting firms that use different accounting systems, templates and reporting practices. While these arrangements may satisfy local statutory requirements, they often fail to meet the information needs of the group headquarters.

The result is fragmented financial information, duplicated work and increasing manual intervention when preparing consolidated accounts.

Another challenge stems from the rapid digitalisation of tax administration around the world. Although many jurisdictions are introducing electronic filing systems, Ms Lau observed that digitalisation does not necessarily reduce compliance workloads. ‘Electronic filing does not always mean less work,’ she said. ‘In many cases, it actually requires even more preparation.’

Meanwhile, geopolitical uncertainty has added another layer of complexity. Regional conflicts, regulatory changes and evolving international tax rules can all affect reporting obligations, yet companies are still expected to meet statutory reporting deadlines regardless of external events.

Ms Lau highlighted the implementation of the Organisation for Economic Co-operation and Development (OECD)’s global minimum tax under Pillar Two as another example of the increasingly sophisticated tax environment facing multinational groups.

Against this backdrop, she suggested that organisations should move away from decentralised compliance models towards more integrated governance structures. Rather than allowing individual jurisdictions to operate independently, companies should establish standardised processes, central oversight and clear reporting lines across the entire group.

Many clients ultimately share the same objective. ‘They want a single process that gives headquarters complete visibility,’ she explained. ‘They also want a reliable team that understands both the local market and the way Chinese companies operate.’

Centralisation also reduces communication costs. Instead of headquarters coordinating separately with numerous local advisers across different time zones and languages, a single point of contact can coordinate service delivery and maintain consistent standards across jurisdictions.

According to Ms Lau, organisations should evaluate potential service models across four broad dimensions – service quality, project management capability, data integration and governance.

One practical recommendation was the adoption of a single contact model, whereby one coordinator manages communications with all the local teams. ‘A single point of contact can significantly reduce communication costs. This also helps ensure consistent service standards across different jurisdictions.’

Equally important is the standardisation of data and reporting processes. Different accounting systems, inconsistent reporting templates and varying interpretations of accounting standards often create difficulties when preparing consolidated financial statements. Regular compliance reviews and staff training also play an important role in maintaining consistent standards across international operations.

Ms Lau also discussed how compliance considerations differ across the world’s major investment destinations.

Southeast Asia remains one of the most popular regions for Chinese enterprises, particularly for manufacturers and retailers seeking access to rapidly growing consumer markets. Countries such as Thailand, Vietnam, Indonesia, Malaysia and Singapore continue to attract significant investment because of their market potential and relatively supportive policy environments.

The Middle East has also emerged as an increasingly attractive destination, particularly for financial services and high-value industries. Strong purchasing power, modern infrastructure and relatively favourable tax environments have encouraged more companies to establish regional operations in locations such as the United Arab Emirates and Saudi Arabia.

Europe presents a different proposition. While offering access to mature markets and advanced research capabilities, European jurisdictions generally impose higher tax rates and significantly more demanding compliance obligations.

‘In Europe, companies obviously need to comply with local reporting requirements. However, once they reach a certain scale, they may also have additional reporting obligations under EU regulations,’ Ms Lau clarified.

Given these regional differences, she emphasised that compliance planning should begin well before overseas operations are established. ‘Upfront planning is extremely important,’ she stressed. ‘Compliance is important, but companies should also work closely with local tax specialists to understand available tax incentives. Otherwise, they may end up paying more tax than necessary.’

She added that engaging local experts during the planning stage enables organisations to design more efficient tax structures while ensuring compliance with local regulations from the outset.

While accounting and tax compliance provide the financial foundation for overseas operations, organisations must also navigate an equally complex web of employment laws, payroll regulations and social security requirements. Roger Huang, Director of Business Development, Corporate Services, Vistra Greater China, recounted that payroll compliance is often underestimated during international expansion, despite its direct impact on both regulatory compliance and employee experience.

He observed that the challenges companies face evolve as their international footprint grows. Organisations in the early stages of overseas expansion encounter a very different set of issues from those with established multinational operations.

For companies that have expanded overseas within the past few years, the most common difficulties relate to inconsistent service quality, limited local expertise and the administrative burden of managing multiple vendors. ‘In many cases, the business expands first and HR follows afterwards,’ he said. 

As overseas operations are often established to support commercial objectives, HR teams frequently inherit payroll providers selected by local business units, rather than through a coordinated governance process. In other cases, existing service providers subcontract payroll work to local firms in jurisdictions where they lack their own teams, creating additional layers of communication and potentially reducing the quality of technical advice. To illustrate, Mr Huang cited the example of a client asking a question and the provider only answering that specific point. ‘They might not provide broader planning or proactive advice.’

As companies expand into more jurisdictions, the number of payroll providers increases correspondingly, making coordination progressively more difficult. Instead of operating under a unified governance framework, payroll administration becomes fragmented across diverse countries, systems and service providers.

For organisations that have been operating internationally for five years or longer, however, the primary challenge shifts from service delivery to information management. ‘They already have successful overseas operations,’ Mr Huang noted. ‘They may even have acquired local companies. The challenge then becomes data.’

Payroll information often resides in different HR systems, attendance systems and finance platforms across multiple jurisdictions. While local payrolls may be processed successfully, management lacks a consolidated view of labour costs, compliance status and workforce data.

As a result, senior management increasingly expects HR teams to provide meaningful workforce insights rather than simply processing the monthly payroll. ‘They want global payroll data that can support management decisions,’ Mr Huang said. ‘But without a unified platform, it’s very difficult to achieve.’

To address these challenges, Mr Huang advocated a more integrated approach that combines local expertise with centralised technology. Rather than engaging separate providers in each jurisdiction, companies should seek partners capable of delivering both local compliance support and global coordination through a single operating model. ‘What many companies are looking for is a one-stop solution,’ he asserted.

A central payroll management platform, he explained, should connect with local HR, attendance and payroll systems around the world while validating data before payroll calculations begin. Such a platform would also enable organisations to monitor payroll schedules across jurisdictions, where submission deadlines, approval dates and payment dates often differ significantly.

‘Every country has different cutoff dates, different pay dates and different reporting deadlines,’ Mr Huang specified. ‘Companies want to manage all of those processes on one platform.’

Beyond workflow management, technology also enables organisations to generate consolidated reporting and labour cost analysis for management. Payroll information can be integrated with finance systems, allowing organisations to automate journal entries and improve financial reporting while reducing manual intervention.

Mr Huang also highlighted the value of maintaining a global compliance library that consolidates employment legislation, tax rules and social security requirements across multiple jurisdictions.

Companies need more than access to legislation, they also need practical guidance on how regulatory changes affect payroll operations. ‘They want to know whether a policy change will affect payroll this month or in future months,’ he said. ‘Ideally, they want an expert or a platform that can tell them clearly yes or no.’

Compliance should therefore be supported through myriad layers of governance. Local specialists must first identify regulatory changes and interpret new requirements. These changes should then be reflected promptly within payroll systems so that updated tax rates, social security contributions and calculation methods are automatically incorporated into payroll processing.

Technology also plays an important role in validating payroll inputs before calculations begin. Mr Huang illustrated this using overtime regulations. Different jurisdictions impose different statutory limits on working hours and payroll systems can automatically identify where submitted overtime exceeds legal thresholds before payroll is processed.

‘Through system controls, companies can ensure that the data collected complies with local legal requirements,’ Mr Huang argued. This reduces manual checking while strengthening compliance throughout the payroll process.

Ultimately, Mr Huang pointed out that combining local expertise with integrated technology enables organisations to improve both efficiency and governance. ‘If service providers can offer this complete approach, it becomes a very effective model for managing global payroll,’ he stated. 

The final presentation of the seminar shifted attention from payroll to another increasingly important aspect of corporate governance – entity management.

Ellen Ng, Director of Business Development, Global Expansion Platform, Vistra Greater China, observed that, as organisations establish legal entities across multiple jurisdictions, company secretarial teams are often responsible for maintaining corporate records, monitoring statutory deadlines and coordinating compliance across different legal systems. Yet many organisations continue to rely on highly manual processes. ‘Many companies are still managing entity information using Excel spreadsheets,’ she disclosed.

Corporate documents are frequently stored on individual computers or dispersed across different offices, making information difficult to retrieve. Requests for shareholder records, board documents or corporate filings often require lengthy email exchanges across several time zones. ‘People can spend a lot of time simply looking for documents,’ Ms Ng affirmed.

As international operations expand, these manual processes become increasingly difficult to sustain. Without a central repository, organisations risk missing statutory filing deadlines, losing important documents or maintaining inconsistent corporate records across jurisdictions.

Ms Ng mentioned that technology can significantly strengthen governance by creating a single source of truth for entity management. ‘When all entity information is stored in one place, colleagues in different locations can access the same information quickly and easily.’

Centralised document management enables authorised users to retrieve shareholder information, board records and statutory documents without relying on various local offices. At the same time, automated compliance trackers can monitor filing deadlines across jurisdictions and issue reminders before statutory obligations become due. Given that filing schedules differ widely between countries, automation helps reduce the risk of missed submissions and regulatory penalties.

Technology can also simplify the management of complex corporate structures. Rather than manually preparing organisation charts whenever ownership changes occur, companies can generate updated group structure diagrams automatically from centralised entity data. This not only improves efficiency but also supports faster decision-making by providing management with an accurate and current view of the corporate structure.

Ms Ng also highlighted the growing role of artificial intelligence (AI) in corporate governance. By integrating AI into entity management platforms, organisations can search corporate records, retrieve information and answer routine governance questions more efficiently.

Rather than replacing governance professionals, Ms Ng suggested that AI should be viewed as a tool that enhances productivity by reducing administrative work and allowing company secretarial teams to focus on higher-value governance activities.

The seminar concluded with a Q&A discussion exploring how organisations can strengthen compliance before entering overseas markets.

Responding to a question on managing tax and accounting risks, Ms Lau reiterated that careful planning at the earliest stage of expansion remains the most effective way to reduce future compliance challenges. 

Ms Lau also encouraged companies to assess the differences between international and local accounting standards before establishing overseas operations and, where possible, to adopt accounting policies that minimise reconciliation issues across the group.

Tax planning should receive equal attention. As more than 100 jurisdictions implement the OECD’s Pillar Two global minimum tax rules, organisations must understand not only their compliance obligations but also the tax incentives available in each market. ‘We should first make sure our planning is complete, then ongoing compliance becomes much easier.’

Mr Huang similarly stressed that effective payroll governance requires more than technology alone. Organisations need knowledgeable local professionals to interpret legislative changes while ensuring payroll systems are updated promptly to reflect new regulatory requirements.

Technology, he remarked, should support rather than replace governance by validating payroll data, monitoring compliance and reducing manual processes.

Finally, responding to a question about multilingual support, Ms Ng indicated that technology platforms should accommodate the practical needs of Chinese enterprises operating globally. She explained that multilingual interfaces, combined with local service teams capable of communicating in local languages, help reduce communication barriers while supporting more effective cross-border governance.

• early planning and a robust governance framework are essential for managing the increasingly complex tax, accounting and regulatory requirements of international expansion
• as businesses grow overseas, centralised payroll management, local expertise and integrated technology can help improve compliance, efficiency and global data visibility
• managing overseas expansion successfully requires balancing local regulatory requirements with group-wide governance standards and effective cross-border coordination

The original article was published in The Journal of the Hong Kong Chartered Governance Institute (August 2026).