What are local country indirect taxes?

Some countries charge costs when employees are hired through an Employer of Record (EOR) product like Remote. These costs are added on top of the standard employment.

Because Remote acts as the legal employer for EOR hires, we are responsible for paying these costs to the local authorities. To remain compliant with local regulations, Remote passes these costs directly to customers at the exact rate set by each government. There is no markup.

Frequently Asked Questions (FAQs)

What are local country indirect costs?

These are additional employment-related costs required when a third party, like an EOR, is used to employ workers. These costs are not standard payroll contributions, but extra charges applied for legal or regulatory reasons.

They are based on value-added tax (VAT) rules and other indirect tax legislations. The applicable rate is the country-specific VAT percentage that is determined by the national government of a country and can either be a flat rate or can differ based on certain factors like the type of services offered by your team member in the specific country.

How is the cost calculated?

These costs are charged on a monthly basis and depend on the employee’s country of employment. The calculation method differs by country:

• Full rate taxable countries: A set percentage is applied to the total monthly cost of employment. Example: If the total monthly employment cost is $3,000 and the fixed rate is 10%, the additional cost would be $300 per month.
• Partial rate taxable countries: The cost depends on factors such as the employee’s role and whether they perform work locally or for international clients. Remote evaluates the employee’s actual work activities to determine the correct approach and ensure the best possible outcome for the customer. Example: A sales representative in Taiwan working with clients in Taiwan may trigger this additional cost. However, a software engineer based in Taiwan but working with global clients may incur a different cost.

Which countries are affected?

Currently, this cost can apply to employees hired through Remote’s EOR product in the following countries:

Full rate taxable countries:

• Armenia 🇦🇲
• Panama 🇵🇦
• Indonesia 🇮🇩
• Bolivia 🇧🇴
• Paraguay 🇵🇾

Partial rate taxable countries

• Brazil 🇧🇷 
• Chile 🇨🇱 
• China 🇨🇳
• Lebanon 🇱🇧
• Mexico 🇲🇽
• Sri Lanka 🇱🇰
• Taiwan 🇹🇼
• Thailand 🇹🇭
• Tunisia 🇹🇳
• Turkey 🇹🇷
• Uruguay 🇺🇾

How can I plan for these costs?

To support budgeting and hiring decisions, Remote provides the following tools and resources:

• Use the Cost Calculator to estimate additional government-imposed costs by country before you begin the hiring process.
• Review the cost overview during the employee invitation flow in the Remote platform to understand any country-specific charges before onboarding.
• After onboarding, you can review the detailed monthly charges in your reconciliation invoice breakdown once the employee has been onboarded.