IT Contracting in China

IT contracting in China is a great opportunity for specialists. To make the most of it, you’ll need a strategy for handling the numerous admin responsibilities.

China IT Contracting

Going it alone: figuring out your visa and taxes

First of all, you need the right work permit and work visa. China generally requires an employee sponsor for your permit. A sponsor takes responsibility for you for the duration of your work in the country.

As a contractor without a full-time employer, this presents some problems. Even if you manage to find a client who will sponsor you (which is difficult), you need a new sponsor for each new contract.

Secondly, you need to figure out your tax liability both in China and in your country of tax residency. Not only is this time-consuming, but mistakes can result in paying too much (or too little).

Using an intermediary: benefits of working with an Umbrella Company

Many contractors outsource burdensome admin tasks to an Umbrella Company.

The Umbrella Company essentially acts as your employer, even though they don’t control your clients, your workload, or your hours. They collect payments from the end client, filter out the necessary social security and other fees, and send you a net wage.

They also sponsor contractors for work permits. This means you’re working under a single permit, instead of constantly applying for a new one (or having to turn down clients who can’t sponsor you). You can find out more info on permits and visas in this FAQ.

They’re also experts in local tax law, so you don’t have to navigate a whole new tax system on your own. They ensure you keep the largest amount of earnings as you legally can. They can also help you reduce any tax liability back home. 

You keep more of your earnings, all while staying on the right side of tax authorities in China and in your country of tax residency.

Basically: you get all of the benefits of a full-time employer, without giving up any of your independence as a freelance worker.

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