Companies can access talent pools from all over the world, including India, a global leader in technology, finance, and engineering, in the era of remote work and global hiring.
International tax law's Permanent Establishment (PE) principle establishes whether a foreign business, even in the absence of a registered office or local entity, must pay corporate tax in a nation where it conducts substantial business.
Why PE Risk Is a Big Deal for Foreign Companies Hiring in India
If your business is deemed to have a permanent establishment in India, you may be liable for:
1. Corporate Income Tax on Revenue from Indian Sources
2. Penalties and back taxes (including interest)
3. Indian tax authorities' audits
4. Legal problems and harm to your business's reputation abroad
How an Employer of Record Helps You Avoid PE Risk
A third party that lawfully hires employees on your behalf in other nations is known as an Employer of Record (EOR). You oversee daily operations, but the EOR is in charge of contracts (compliant with local laws), withholdings for taxes, and payroll, benefits provided by statute, local labor laws and compliance.
Because you're not making direct hires or setting up a permanent business presence, EOR reduces the risk of PE.
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