Remote Work Boom Sparks Industry Call for Clearer Tax Rules

"Tax professionals are calling for more consistency in global tax rules covering remote workers, saying the current patchwork of approaches across jurisdictions is causing big headaches for multinational companies. The OECD has been working on new guidance on workforce mobility and launched a consultation in November asking for stakeholder feedback. In their comments, practitioners and business groups detailed tax issues they want addressed by the organization, such as when a worker's presence in a country makes a company's business there taxable or what a high-level executive working overseas can mean for a company's transfer pricing positions."

"Remote worker issues "are often not driven by problems with current international tax principles, but by uncertainty and often administrative complexity in their application to new mobility patterns," CFE Tax Advisers Europe said in a letter to the Organization for Economic Cooperation and Development."

""In some jurisdictions, the mere presence of an employee may immediately create a taxable presence," the National Foreign Trade Council wrote in its letter. Other jurisdictions require a much higher level of activity. "This uncertainty is compounded where payroll reporting, withholding, and social tax obligations are triggered independently of whether a permanent establishment exists," the NFTC said."

Global tax inconsistency around remote workers is producing compliance headaches for multinational companies. The OECD launched a consultation on workforce mobility and sought stakeholder feedback. Practitioners and business groups flagged key concerns including when a worker's presence creates a taxable business presence and how foreign executives affect transfer pricing positions. CFE Tax Advisers Europe said uncertainty and administrative complexity, rather than flaws in core principles, drive many problems. Remote work raises permanent establishment questions and subjects entities to transfer pricing rules. The NFTC noted some jurisdictions treat mere employee presence as taxable and payroll or social tax obligations can be triggered independently.

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