International nongovernmental organizations (INGOs) have typically relied on remote workers in the past. However, due to the pandemic, shifting global markets, and other factors, there’s a greater emphasis on building remote teams. Naturally, INGOs need to have a global presence, and hiring workers in the countries INGOs operate in makes sense.
Because of the growth and popularity of remote work, it’s important for INGOs to consider how they’ll build their remote workforce so they can be effective in their mission and vision for the organization.
Remote Workforce Considerations
In this guide, we’ll cover five things INGOs should consider when building a remote workforce.
1. International Payroll
INGOs with international employees will most likely need to register and pay into the country’s local payroll system. Each country may have distinct payroll reporting obligations in certain jurisdictions. If they do not register, they’re subject to compliance issues that can lead to penalties.
2. Permanent Establishment
INGOs with a permanent establishment (PE) in a foreign country will most likely be subject to taxes in that jurisdiction. Typically, treaties establish PE rules. However, if no treaty is available, an INGO can refer to local laws and regulations.
Regardless, INGOs must understand what business procedures prompt taxation. Not abiding by a foreign nation’s laws could result in not only paying foreign taxes, but not receiving a U.S. tax credit.
3. U.S. Employment Tax
Payroll taxes can get complicated with multi-state teams. Even if an INGO has physical office spaces, if they have remote workers in another state, the INGO still needs to register in each state it has an employee.
INGOs must also consider tax implications; different states have different tax laws. For example, different states have specific hourly wage and/or overtime requirements.
4. Individual Taxation
INGOs with employees working outside their home countries must understand and follow personal tax filing requirements in each country. In fact, they will most likely need to file income tax returns in both their home country and the country they work in. These varying tax requirements can create confusion, as INGOs and their employees may not be aware of the requirements or what they need to do to resolve any issues.
To avoid penalties, they would most likely need to review their tax filing requirements with an international tax advisor (for both countries) to ensure their paperwork is correct.
5. Human Resources Policy
Lastly, it’s important for organizations to create clear guidelines for remote workers. Human resources must ensure they’ve built a system that can efficiently comply with local tax regulations in any given jurisdiction.
Additionally, an INGO’s human resources team needs to have policies that can accurately measure key performance indicators for their remote workers, and build fair metrics for all positions. Employers must consider these factors before building a remote workforce. Luckily, there are ways to expedite this process.
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