- What are the Tax implications for US company hiring offshore software consultants?
- How different is it from hiring a consultant from US in tax filings?
- Are taxes higher for a US Company to hire an offshore consultant?
The main implication is the withholding of taxes from the payments. You must withhold and remit to the IRS 30% of the payments sent to the non-resident contractor.
If you're asking about the difference between the resident and non-resident contractors - then that's the difference: for non-residents you're required to withhold, for residents you're not required to withhold (unless there's a specific withholding requirement for that particular person).
Higher, you mean? No, there's no tax on hiring consultants (as contractors, that is), whether on-shore or off-shore. The withholding is from the money you pay to your consultant, its the consultant's tax, not yours.
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Agreed the answer is completely incompetent.
You don't withhold any taxes from the pay to your offshore consultants because they are not us citizens,they are not on us soil thus the income is NOT considered us sourced.