The International Monetary Fund (IMF) expects the real economy of the Land of the Red Dragon to expand by 20% over the next 15 years, starting 2024. China is said to have entered “a new era of high-quality growth.” This presents a plethora of opportunities for businesses, contractors, and individuals seeking employment opportunities.
Deep structural reforms and government initiatives to provide some much-needed stimulus to the economy are set to facilitate entrepreneurship. In addition, green transformation and digitization-led innovation are expected to bolster growth and improve living standards in the country. However, entering the world’s largest trading nation can be complex. Discover how you can navigate the complexities and optimise opportunities presented by the Chinese economy.
Navigating the Complex Taxation System of China
The taxation system is already complex without the difficulty added by the language barrier in the country. China applies different taxes to natives, resident expats, and non-residents deriving income from the country. Multiple tax categories with distinct tax rates are not only difficult to manage but often force people to bear unjust burdens (due to a lack of understanding) to avoid penalties. Disparate Individual Income Tax policies across regions make it difficult to seek help from employers as well.
Getting a Work Permit in China
Independent contractors need a visa sponsor to secure a work permit and apply for a visa. Since these are not renewable, they have to procure one each time they renew a contract or acquire a new client. This adds to the administrative task as well as the pressure of procuring more work and getting sponsored before the existing visa expires.
Individuals often face difficulties in managing the labyrinthine paperwork, which itself requires full-time effort due to the complexities involved. Moreover, they have to manage the tax liabilities of their native countries as well. Due to this, the contractor retention rates in the country are quite low. This means businesses are unable to adequately harness the benefits of contractual work arrangements.
High Social Contribution Rate
Social contribution rates in China are among the highest in the world. The employer is liable for 33.8%, while the employee’s social contribution is 17.5%. While the rates vary according to the jurisdiction, they cover pension and insurance, such as medical, work-related injury, maternity and unemployment. For the employer, this adds to the employee’s cost to the company. Additionally, there are region-based regulations to compensate for every hour worked beyond the 44-hour workweek. Needless to say, non-compliance leads to massive penalties.
An Experienced Partner can Ease Entry
Recruiting, working, or contracting in China is no piece of cake, thanks to the stringent government regulations, a complex taxation system, and a multi-tiered social contribution system unique to the country. Moreover, the mounting penalties for faltering may further discourage you from exploring the plethora of opportunities in the land that is home to 1.4 billion individuals.
The best way to navigate the complex system is to have a partner by your side who can manage all the tedious paperwork, help reduce your tax liabilities legally, and ensure you remain compliant with local employment laws. Access Financial is a trusted partner for contractors and individuals looking for work in China.
Our broad range of services include:
- Contract administration
- Payroll outsourcing
- Employer of Record (EoR)
- Work permit or immigration assistance
- Payroll web-portal
- Insurance packages
Through 21 years of successfully operating in the country, Access Financial has established itself as a trusted partner for businesses to carry out profitable operations.
Our online platform enables fast onboarding within a few days for both contractors and full-time employees. The process includes registration with all applicable tax bureaus. Through comprehensive regulatory compliance with contractual and labour laws, we enable both parties to reap the maximum benefits of a contract. Access Financial has maintained a contractor retention rate between 47% and 69% with its EOR services in China.
Additionally, we manage all your payments and invoices, while ensuring timely salary credits, adhering to the labour laws of the country. Our experts are adept at reducing tax liabilities for individuals and businesses operating in China.
Speak to us to learn more about our solutions to empower business owners, contractors, and individual workers in China. You can call us at +86 21 5269 8801 or send your requests by email at [email protected].