Country tax regulation

Depending on each country's tax regulation, consultants' income will be treated as income from their business or profession and various expenses are deducted. The net income is liable to tax at the applicable country's rate.

For this reason, consultants will add the net profit from this work to their other incomes (if any) and compute their taxes based on that total.

Typical examples for allowable deductions are:

• Transportation costs
• Communication costs (e.g. mobile phone bills, landline and internet costs)
• Depreciation of computer, printer, automobile, and other durable goods (if any is applicable)
• Salary paid to a part time assistant
• Medical insurance (sometimes)

This process of deducting costs should ordinarily result in the tax liability of the consultant being significantly lower than the tax liability of the employee. However, there are two exceptions to this rule:

• When employee salaries are broken up
• When the employer is willing to pay Fringe Benefit Tax

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