North Africa is starting to make a name for itself as a go-to option for hiring independent contractors, particularly for tech, customer support, design, content creation, and engineering roles.
However, before you hire your first independent contractor in North Africa, you must get up-to-speed on local regulations governing foreign contractor payments — including tax obligations and payment methods.
Key takeaways:
- Every country in North Africa has local laws determining whether a worker is considered a contractor or an employee.
- Even though countries in North Africa aren't part of the EU, GDPR laws may still apply.
- Some countries require you to pay contractors in their local currency.
Which Countries Are Part of the North Africa Region?
North Africa includes the following countries:
Regulations Governing Contractor Payments in North Africa
In order to pay your independent contractors in North Africa compliantly, you'll first need to familiarize yourself with local labor laws. This will help you head off any potential legal issues.
Worker Classification
First things first — before hiring a contractor, you'll want to check the laws in the country where they reside. Common criteria used to determine if a worker is a self-employed contractor or an employee include how much control the worker has over when and where they work and if they use their equipment or the company's.
Read up on the employment laws in whatever country you're hiring to ensure you get it right. Misclassification of an employee as an independent contractor can lead to significant penalties, even if it was an honest mistake.
Tax Obligations
Contractors in the North African region are generally responsible for their own taxes, although some countries may require businesses to withhold taxes from payments made to contractors.
Tax regulations for contractors can also vary across North African countries. For example, contractors in Egypt must register with Egyptian tax authorities within 30 days of signing a contract.
Cross-border Tax Treaties
Certain countries have tax treaties that can affect the tax obligations of foreign businesses and contractors.
For example, Egypt has tax treaties with various countries, including the U.S., which can influence withholding rates and tax liabilities. Check to see if any treaties will apply in your case so you understand your company's tax responsibilities before hiring contractors.
GDPR Compliance & Data Protection
The General Data Protection Regulation (GDPR) is a European Union (EU) regulation. However, while GDPR does not directly apply to North African countries, it can still impact businesses in several ways.
How GDPR Impacts North African Businesses
Obviously, North African countries are not EU members. However, GDPR applies extraterritorially, which is a fancy way of saying it can affect businesses outside the EU if they:
- Process personal data of EU residents (e.g., collecting, storing, or analyzing data of EU customers)
- Offer goods or services to individuals in the EU
- Monitor the behavior of individuals in the EU, such as tracking EU website visitors
This means that companies (and their contractors) operating in North Africa and dealing with EU customers or businesses must comply with GDPR.
North African Data Protection Laws
Several North African countries also have their own data protection laws, some of which share similarities with GDPR:
- Morocco's Personal Data Protection Law (Law 09-08) outlines the legal framework that data controllers in Morocco must follow when processing personal data, including consent, data security, and data subject rights.
- The Organic Law No. 2004-63 on Personal Data Protection governs data privacy in Tunisia and covers all automated and non-automated processing of personal data. The country is working to modernize its laws to align with GDPR more closely.
- Egypt enacted Personal Data Protection Law No. 151 of 2020, which includes GDPR-like requirements such as user consent, data processing regulations, and penalties for non-compliance.
- Algeria's Law No. 18-07 on Personal Data Protection regulates data processing, which includes requiring user consent and setting obligations for data controllers.
- There are no data protection laws in Libya and Sudan, but businesses engaging with the EU may still need to comply with GDPR.
Best Practices for Paying Contractors in North Africa
There are a few basics to keep in mind when it comes to international payments for independent contractors.
- Understand local laws: Do your due diligence to familiarize yourself with the labor and tax laws of the country where you're hiring.
- Choose the best payment methods: Check to see which are considered the most reliable and are also in line with your company's and contractor's preferences.
- Put it in writing: Ensure payment terms, methods, and schedules are clearly outlined and agreed upon in the contractor agreement.
- Be mindful of currency exchange rates: Factor in exchange rates and any currency conversion fees that might affect the final amount received by the contractor.
Currencies in the North Africa Region
Each North African country has its own official currency, including:
- Algeria: Algerian Dinar (DZD)
- Egypt: Egyptian Pound (EGP)
- Libya: Libyan Dinar (LYD)
- Morocco: Moroccan Dirham (MAD)
- Sudan: Sudanese Pound (SDG)
- Tunisia: Tunisian Dinar (TND)
Verifying whether you can legally pay your contractors in foreign currencies is essential. That's because some countries may require all payments to be made in the local currency.
Payment Options for North Africa Contractors
When paying independent contractors in North Africa, there are several commonly used payment methods:
- International wire transfers: A secure and widely accepted method, international transfers allow direct bank transfers directly into the contractor's bank account. However, they can be costly and may take several days to process.
- Digital payment platforms: Platforms like PayPal, Skrill, Wise, and others are gaining popularity in parts of North Africa. They offer quicker payment processing but also include fees and may not be available in every country.
- Mobile money: In some African countries, mobile money has become a standard payment method. While more common in Sub-Saharan Africa, its adoption in North Africa is growing.
- Wafacash: In Morocco, Wafacash is a payment service that facilitates money transfers and payments.
Pay Your North Africa Contractors with RemoFirst
Paying international contractors in North Africa isn't hard, but it requires studying local laws and regulations, which can be time-consuming.
One way to streamline the process is by partnering with an Employer of Record (EOR) like RemoFirst. We ensure contractors are correctly classified, paid on time, and in their local currency.
Not only that, RemoFirst takes full responsibility for making any legally required tax withholdings and social security contributions, providing GDPR-compliant payment solutions, and managing currency exchanges and local banking requirements.
Book a demo to learn how our global payroll solutions can help you pay contractors in the North Africa region compliantly and hassle-free.
