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Multi-location Assignment Tax Guidelines

 

Introduction

 

As part of your Multi-location Assignment, you may be required to report income
and pay taxes in your Assignment Location(s), as well as in your Home Location.

The Company’s goal is to comply with all income (including but not limited to
Federal, state & local, cantonal, and provincial) and social security tax
regulations of the Home and Assignment Locations. 

To help you understand and comply with the appropriate tax regulations, the
Company has outlined these Multi-location Assignment Tax Guidelines (the “Tax
Guidelines”), which will apply during your assignment.

 

Tax Consultation Services

 

Dresser-Rand has engaged the services of Ernst & Young to provide tax
preparation and consultation services throughout your assignment and thereafter,
to the extent the Company deems appropriate. 

 

Assignee’s Responsibilities

 

Assignees may be required to submit tax returns in any location in which tax
obligations arise or where filing is otherwise required.  The Company expects
Assignees to observe appropriate regulations and the Dresser-Rand Code of
Conduct.  The Assignee’s cooperation in preparing and filing the required tax
return(s), as well as making appropriate payments, is essential to this process.

 

Despite the fact that the Company has agreed to provide the Assignee with
certain tax services, the Assignee must provide all necessary tax
information.  In addition, the Assignee must ensure Home and Assignment Location
tax returns are submitted in due time, according to communication from Ernst &
Young.

 

Where the Assignee undertakes “significant financial transactions”(as described
below), in the Assignment  Location, without seeking advice from the Company
and/or Ernst & Young, and that transaction has a materially adverse impact on
the tax liability, the Company reserves the right to pass this additional cost
back to the Assignee.

·

Individuals should seek advice before proceeding with “significant financial
transactions” in the Assignment Location including (but not limited to) the
following as examples:

o

Purchasing a home or other property in the Assignment Location

o

Acquiring a business interest in an Assignment Location company (becoming a
director or owner in an Assignment Location company/partnership, etc.)

o

Making significant investments in the Assignment Location

Assignee is required to spend more time in the Home Location than the Assignment
Location.  Any deviations to this require pre-approval by the CEO.

 

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Tax Methodology

 

During the Multi-location Assignment, tax equalization will not apply; however,
in cases where incremental taxes become payable as a result of the Assignment,
the Company will reimburse such incremental taxes.  Any tax assets or benefits
created by such reimbursements will remain the property of the Company until
such time as they are recovered, and will be reimbursed to the Company by the
Assignee at such time.

 

Basic Calculation Method 

 

During the year, the Company will deduct the taxes (if any) required per Home
and Assignment Location regulations from Home Location payroll, taking into
account expected credits arising from taxes on employee compensation in the
Assignment Location.  The locally-required amounts will be remitted to the
Assignment Location authorities.

 

The calculations will be performed periodically and as required by law to comply
with reporting, withholding, and payment requirements.  The frequency and method
of payment will be communicated to Assignees in advance.

 

At year-end, after the Home and Assignment Location tax returns have been
finalized, the final tax liability will be computed.  The calculation is based
on Home Location tax laws then currently in force. 

 

If the total final tax liability (Home and Assignment Location) borne by the
Assignee exceeds the Home Location taxes that would normally be incurred by the
Assignee on all sources of income (Company and Personal income and deductions),
   the Company will reimburse the incremental taxes to the Assignee subject to
the terms and conditions of these Tax Guidelines.

 

Withholding and Deductions

 

Home and Assignment Location withholding and/or payment amounts will be deducted
from the Assignee’s Home Location payroll as noted above, and necessary amounts
will be transferred to the Assignment Location to fund local withholding and
payment obligations. 

 

Ernst & Young will determine and communicate the applicable Home and Assignment
Location withholding and/or payment requirements.

 

Record Keeping Requirements 

 

Reporting Non-company Compensation

The Assignee will be responsible for providing Ernst & Young with details of
compensation paid to him and his spouse/partner by other employers, as well as
personal income (i.e., interest, dividends, etc.) and deduction information.

 

Travel Calendar

It is imperative that the Assignee keep a detailed log of travel for each
calendar year in which the Assignee is covered by the Tax Guidelines.  Ernst &
Young will provide the Assignee access 

 

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to myEYOnline and the electronic travel calendar for tracking purposes.  The log
will be used to compile the following information:

Total days worked in the year detailed by month

Days worked in each location, separated on a country-by-country (or
state-by-state) basis

Days physically present in each location, separated on a country-by-country
basis

This includes closely monitoring your presence and workdays in the Assignment
and other locations to minimize the tax liability(ies)

Depending on facts and circumstances, it may be necessary to report the travel
of the spouse/partner in each location

 

Note that the travel calendar also includes days in the Home and/or Assignment
Location purely for non-work purposes such as vacation.

Other Location-Specific Actions and Record Keeping

Assignee actions and record keeping may vary depending on Assignment Location
and facts and circumstances in each individual case.  Therefore, from time to
time, additional requirements may be applicable.  Ernst & Young will provide the
Assignee with Location-specific information and tools to assist in minimizing
the tax obligation(s).    Location-specific information may be found in the
appropriate country Exhibit.  From time to time, the Exhibit(s) will be updated
to provide current/updated information and to add new locations as the need may
arise.

 

Income Tax Organizer

Ernst & Young will send the Assignee an Income Tax Organizer to be used in
preparing the Home and Assignment Location income tax returns.  As outlined in
the responsibilities, the Assignee must carefully complete all requested
information and return the Tax Organizer to Ernst & Young in due time, according
to submission and filing deadlines provided by Ernst & Young. 

 

Company wage and employment income information is provided by Dresser-Rand
directly to Ernst & Young.

If the Assignee is assessed tax on income that was not disclosed to Ernst &
Young, and not included in the appropriate tax returns, the Assignee will be
responsible for the additional taxes, penalties, and interest due.   Tax
reimbursement will not apply on such amounts.

 

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Agreement

 

Assignees agree to the following during the Multi-location Assignment and for a
period following the Assignment where necessary:

·

That the Company is authorized to share the wage and employment income to Ernst
& Young;

·

That any tax benefits derived from Assignment Location tax payments, made by the
Company, will be returned to the Company after individual tax returns are filed;

·

To authorize the Company to deduct (reduce from Assignee’s earnings) any amounts
owed under the Tax Guidelines and where permitted by law; and

·

That benefits under the Tax Guidelines shall be construed and interpreted in
accordance with the laws of the State of Texas without regard to its conflict of
laws principles

 

Tax Guideline  Conditions

 

·

The Company reserves the right to make final decisions as to the interpretation
and application of the Tax Guidelines and associated practices.  The Tax
Guidelines will be continuously reviewed to ensure appropriateness and from time
to time may be modified or changed to better meet the needs of the Assignees
and/or the Company

·

The contents of the Tax Guidelines shall not be construed as constituting or
creating an employment agreement or contract with the Assignee.  The statements
included in the Tax Guidelines supersede all previous statements to the Assignee
related to International Assignment(s) and associated tax-related matters

 

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