Remote people are/will get paid less than on-site people on average, with this in mind I don't think these (relatively small) additional costs will have a significant effect.

The only issue I see is with the extra paperwork this will bring.

Having said that, I still think this is a wrong measure which creates bad incentives (not trying to save money on the costs since they're partially covered by employer). This should just be a part of the compensation. Alternatively, a fixed rate for all remote workers (which would also solve the bureaucracy).