That has nothing to do with the salary-question though. You could separate that completely (and many do via contractors: nobody asks a contractor where they live to set a price for their work): have one party in the company negotiate the salary, and have another deal with employee locations as required by law. Those two don't need to have any contact.
Taxes would be one of the legal requirements, yes. They are required and have a valid interest (as in "who are you, and how can we reach you?") to know where you live. "So we can figure out how much we need to pay you" is not a valid interest in my view. You're not getting paid to live in a certain area, you're getting paid to provide X hours of your time each week.
