Is your business ready for the summer remote working rush?
International remote working is on the rise — and so are the risks. Here is what finance and HR professionals need to know before they approve the next cross-border request.
Every summer, the same requests land on desks across the globe. An employee wants to work remotely from another country for a few weeks. It feels low-risk. The contract stays the same, the salary does not change, and in the UAE, there is no personal income tax to worry about anyway. So organisations say yes — often without asking the questions that matter most.
That instinct to be flexible is understandable. But the compliance picture is significantly more complex than most employers realise, and the consequences of getting it wrong can be costly and difficult to unwind.
Episode 47 of the Chartered Accountants Global Update explores this in depth. Here are the key points.
The UAE tax-free assumption does not travel
One of the most persistent misconceptions in international remote working is that an employee's UAE tax-free status protects them wherever they choose to work. It does not. The moment an employee begins exercising their employment in another jurisdiction, that country's rules begin to apply.
Most countries will not tax a short-term visitor. But once an employee crosses the threshold set out in the relevant double tax treaty — typically 183 days within a rolling 12-month period — the host country acquires the right to tax their income. The calculation is not always straightforward: some treaties count from the date of arrival, others from the date of departure, and some are tied to a specific national tax year. An employee who has worked across borders over several consecutive summers may already be closer to the threshold than anyone realises.
There is also the recoups rule: if the employee works from a related entity of the business in the host country, and that entity picks up any portion of the salary cost, the 183-day protection falls away entirely. Tax liability can begin from day one.
Permanent establishment: the business-level risk
Beyond the individual's tax position, there is a significant risk at the organisational level: permanent establishment (PE). This is the point at which a business is deemed to have a taxable presence in another country — and it can be triggered without anyone intending it.
The fixed-premises test is rarely the issue for remote workers. The more common trigger is the dependent agent test: if an employee habitually enters into, or negotiates the terms of, contracts on behalf of their employer while located in another jurisdiction, that is enough to constitute a PE.
The employees most likely to be doing this are senior ones — the very people organisations are keenest to accommodate. Once a PE is triggered, the business must register in that jurisdiction, file for income tax, account for payroll obligations including social security, and potentially register for VAT. In markets with strict exchange control regimes, such as South Africa and India, there are further regulatory layers on top.
Tax specialists working in this area are clear: this is a board-level decision, not an HR process. The risks accumulate over time, and by the time they surface they are considerably harder to resolve.
What good governance looks like
Organisations that want to manage this risk properly should start with three things.
First, know where your people are. Finance, HR, and payroll teams need a clear, current picture of who is working outside their home jurisdiction, in which country, and for how long. Visa records help, but they are not the complete picture.
Second, take professional advice before approving arrangements. The applicable tax treaty, the PE risk, and the individual's residency position all need to be assessed at a senior level — not retrospectively, once the employee is already mid-stay.
Third, review your broader risk management. Professional indemnity cover, medical aid obligations, and insurance policies may all have territorial exclusions. Some jurisdictions are excluded entirely from standard professional cover. It is worth verifying before the employee boards the plane.
If your organisation already has people working abroad without a proper framework, the priority is to understand the current exposure and take advice on how to address it. In some cases, that may mean restructuring arrangements or temporarily recalling employees. It is manageable — but it requires action.
