Chain Law

In countries where ‘chain law’ exists:

Risk
The tax authorities can and do extract missing contractor’s tax and impose heavy penalties on anyone in the contract chain – the easiest being your client. 

Outcome
Your client will blame you for such an embarrassing intrusion into its business. 

In countries where there is no ‘chain law’:

Risk
Although the contractor is exclusively responsible in law to deal correctly with his or her own tax affairs, in practice many contractors who find themselves under threat of investigation leave the country.  Your client then finds itself without a resource – often at a crucial time in the project. But more embarrassing for your client is the tax authorities have an excuse to carry out a tax audit on the client to see if they can uncover “other instances of tax evasion”. 

Outcome
Again, your client will blame you for this unwelcomed disruption of its business.