Asia’s technology sector presents numerous challenges for employers, with legal frameworks that not only differ across regions but can also be layered with cultural nuances. Because competition for talent in Asia spans the global market, governments are implementing fast-moving regulations around visas and tax to attract the best minds in tech. This Insight focuses on remote work and related immigration, tax, and employment law considerations.
Employees expect more flexibility at work these days, desiring to work around the globe, with some candidates specifically requesting a hybrid working environment—ranging from a few weeks to up to 6–12 months—very early in the recruitment process.
The rise of remote work offers both advantages and challenges. While it allows companies to access talent across borders, it necessitates robust communication infrastructure and collaboration tools. Building a strong virtual work culture is essential, with regular team meetings, online social events, and opportunities for informal interaction. Additionally, companies need to address issues like cybersecurity and data privacy in a remote work environment.
To attract and retain top talent in today's market, competitive compensation packages, clear career development paths, and a commitment to diversity and inclusion (D&I) are essential. Companies should also explore flexible work arrangements and invest in employee well-being programs to cater to the needs of a multicultural workforce.
Policies
Policies should be robust and include what the company expects from its employees and what support it will provide those working remotely. The policy should address the right to work, assistance in times of need, insurance, and medical considerations.
Employers should consider who approves remote work requests to ensure the process is fair and not discriminatory. They should consider setting clear guidelines for remote working, including for frequency of requests, duration, and permitted countries. There should be mandatory recording of where an employee is working and how long they have been there to comply with tax, employment, and immigration regulations.
Immigration, Tax, and Employment Considerations
While some countries in Asia have established specific remote work visas, others might require traditional work visas that are sponsored by an employer. Employers should carefully research the specific country an employee plans to work from and identify the appropriate visa type.
Under some Asian governments, it could be a criminal violation to work without proper work authorization. There could be monetary fines, exit bans, or significant tax liabilities for the company and individual.
A visa does not equate to tax status, and potential tax liability may arise even if there is a right to work in a location.
In many jurisdictions, the permanent establishment threshold test is how tax authorities assess whether a business has performed sufficient activity in another jurisdiction to create a taxable presence. Understanding the job duties of an individual and whether the duties performed may trigger a permanent establishment is important and will help determine whether tax consequences may arise.
It is important to understand how potential tax liability is measured (e.g., where it is on a 12-month calendar that starts in January or a rolling a 12-month period). The tax consequences will also depend on the nationality of the individual in that new jurisdiction and how long that individual performs any job duties in that jurisdiction, as well as whether there are multiple individuals from the same employing entity performing services in that jurisdiction.
Digital nomad visas have become increasingly popular and are now an established visa category in many Asian counties, with some of the most popular destinations being Malaysia, the Philippines, Sri Lanka, and Thailand. Japan and South Korea are newer jurisdictions to offer nomad visas, and they are rapidly gaining in popularity.
Nomad visa holders cannot engage in local employment or local economic business activity. Nor should there be a connection with the local office or the local entity, even if the employee will be working fully for the overseas company while they are in the overseas location.
Employment and tax consideration will not be negated even if an employee is a citizen of the work location or holds a valid nomad visa. Tax filing, registration issues, and permanent establishment risks should be kept in mind. Currency controls, which exist in many Asian jurisdictions, should also be considered.
Risk Mitigation Strategies
With tax issues being the biggest risk for employers, one way to mitigate could be to transfer an individual to a local affiliate office, provided there is one. The local affiliate should have the business scope to cover what the remote individual employee does daily. There could be immigration ramifications that would need to be addressed.
Another strategy is to utilize a secondment. An individual from a US or UK entity could be seconded to Asia if there is an entity in that location that can accept the employee. This could reduce the risk of permanent establishment or tax liability.
Establishing a special entity that is specifically for individuals working remotely could be a way to differentiate the tax responsibilities between the entity that employs the remote working individual from those of the company’s local entity operating in the relevant Asian jurisdiction.
China
On July 10, 2024 the Chinese government implemented its first-ever mainland travel permit for non-Chinese permanent residents of Hong Kong and Macau. Additionally, on July 1, 2024 the government expanded the flexible visa policies it first implemented in December 2023, which allow qualifying foreigners access to mainland China for up to 15 days visa-free. These efforts serve to promote China’s people-to-people exchanges with overseas countries.
Singapore
As of January 1, 2025, Singapore will have an increase in the monthly qualifying salary requirement for employment pass holders. The increase will be around 10% on the current minimum. This is in line with the government's goal to ensure that local Singaporeans are given fair consideration during the recruitment process and receive the same offers and benefits as foreigners from hiring companies. The minimum qualifying salary increase will become an annual exercise.
Singapore’s employment pass assessment framework, the COMPASS, established in September 2023, will apply to employment pass renewals from September 2024. All new employment pass applications and renewals will be subject to the framework. The main change to come with the COMPASS framework is, when submitting a candidate or employee's education background as a qualified criterion, the degree will need to be verified by a third-party background screening agency.
Given the current uncertain economic situation in the Asia Pacific, many countries in the region are loosening their immigration requirements to attract more foreign talent.
Building and managing a successful global technology workforce in Asia requires a nuanced approach that recognizes the region's diversity and leverages its strengths. By fostering a culture of inclusion, embracing flexible work arrangements, and investing in continuous learning, companies can unlock the full potential of this vast talent pool.