The US side of the tax reporting of an overseas contractor is relatively straightforward if:
The worker is not a US citizen or resident alien,
All of the work will occur in the foreign country,
And the worker will not spend any time in the US.
In this scenario, the organization must have the worker document citizenship and residence by completing Form W-8BEN, which should be kept on file, similar to a W-9. The foreign worker does not need a SSN, EIN, or ITIN in order to complete the form. A foreign citizen, who earns US source income, may be subject to nonresident alien (NRA) withholding, which varies according the type of income and any applicable treaty rates. But payment for personal services is sourced according to where the work is performed. If all of the work is done overseas, then the income is foreign sourced, which is not taxable by the US, and NRA withholding is not required. There is no further tax reporting required.
The foreign side of the transaction may not be quite so straightforward. Just as in the US, the first thing to consider is the local definition of an independent contractor. In the US, the IRS considers a list of 20 factors in determining if a worker is an independent contractor or a de facto employee. The same is true overseas, where each country has its own set of labor laws designed to protect local workers.
When considering hiring an overseas independent contractor, always get advice on the specific criteria for an independent worker in the foreign country. Consider using a professional firm that specializes in contracting local workers. Confirm that the firm will handle all of the local paperwork for the worker, and not act merely as a paying agent.