Contractors looking for clients in Asia will have many countries to choose from. You might select Asia because it is close to home (Australia for example), or you are just drawn to the region for cultural or industry reasons. You may be recruited without having a preference, but some contractors will have an idea of where they would like to work and live.
In any case, selecting one or more countries for your client search will require some analysis and research ahead of time. While a country might have personal attraction, it might not be the best place for long-term contracting. This guide will give you some elements to consider for maximum earnings, ease of compliance and quality of life.
How do you decide which is the best country in Asia for you?
When evaluating the best countries for contracting, it is useful to have some criteria to refer to and make a comparison. Many criteria have to be considered together, for example, a country with high rates of pay may also have a high cost of living.
In Asia, English is not as widely spoken as in the Americas or Europe but remains common in business settings. Self-employment visas are rare, so sponsorship by your client or an umbrella company will be essential.
Suggested Criteria:
Industries/ Demand for contractors
Specific industries related to your skills, and overall accepted use of contractors.
Economic health
The overall health of the economy and demand for skilled workers.
Rates of pay
Estimated range of pay rates for your profession and industry.
Income tax and earnings retention
Tax rates and social contributions will affect earnings retention.
Quality of life
The cultural, political and community environment for ex-pats.
Cost of living
Cost of rent, food, transportation, healthcare and entertainment.
Culture/language
Familiarity or appeal of the culture, and any language barriers in daily life.
Regulatory compliance
Ease of contracting/self-employment and clarity of regulations.
Immigration requirements
Work permit availability for contractors, and need for sponsorship.
Examples of Specific Countries
India
India does have some popularity with ex-pat workers due to high rates of pay and very low cost of living. If you work less than six months in the country, you will not be a tax resident and will pay no income taxes. All of this adds up to a location that allows a contractor to retain maximum earnings while enjoying one of the more diverse cultures in the world.
Self-employed tax rate: Progressive rates of 5% to 30% based on income level.
Malaysia
Malaysia may not be the first country to come to mind, but it does have a growing place in the tech industry. You have the choice of working in the modern capital of Kuala Lumpur or smaller size cities such as Penang. Growth projections for Malaysia are positive, and there should be adequate contracting opportunities. If Malaysia is your target, you should begin your job search before committing to the country.
Self-employed tax rate: progressive rates of 1% to 30%, with a flat rate available to non-residents who work less than six months.
Singapore
In Singapore 41% of the population are ex-pats, so you won’t feel out of place. It is a tech innovation hub in Asia, so the use of IT contractors is widespread. There are additional opportunities in marketing, engineering and data science.
There is a cap on work permits due to concerns that ex-pats are taking jobs from locals, but this won’t be a problem for high-demand, skilled professions. You won’t be able to work as an independent freelancer unless you are a resident, so you will need to seek an employment visa through your client or an umbrella company.
Self-employed tax rate: The first $20,000 of income is tax-free, and then progressive rates will apply from 2% to 22%. Non-residents (less than six months of stay) are taxed at a flat 15% or the progressive rate, whichever is higher.
China
As the largest economy in Asia, China does deserve some attention for the opportunities to find clients. China traditionally favours employment relationships, and while contracting is not illegal, there may be more compliance hurdles than in other countries. You might find that potential clients will prefer to hire you as an employee if you plan to work long-term, to avoid attention from regulators.
Self-employment tax rate: The tax rate depends on the category of income, and most personal tax rates are progressive from 3% to 45%. Business income (including sole proprietorships) is taxed from 3% to 35%, while incidental income has a flat tax of 20%.
Japan
The culture and history of Japan along with its modern infrastructure may be of interest to contractors. Historically, Japan had a business culture that favoured long-term employees, but that is beginning to change. The Covid pandemic forced many Japanese to look for self-employment opportunities. This has opened the door for ex-pat freelancers as well.
Self-employment tax rate: Progressive rates of 5% to 45% based on income level, plus a 10% inhabitant tax. Non-residents (less than one year stay) pay a flat 20% with no expense or personal deductions allowed, as well as the inhabitant tax if they happen to be registered as a resident as of January 1 of the following year.
South Korea
South Korea has a significant place in the Asian tech industry and should be a country to consider. It is the fourth largest economy in Asia, and 10th in the world so most professions will be represented. But it can be a difficult culture for ex-pat integration, due to language and societal norms.
Self-employment tax rate: Progressive rates from 6% to 45%, with an election for non-residents of a 19% flat tax rate.
How can Contractor Taxation help you with international contracting?
Contractor Taxation has a network of umbrella companies across Asia that are ready to help you with client payments, tax withholding and compliance. Because each country is different, the local umbrella company will know exactly how to assist you with your contracts and availing of various tax and self-employment programs.
Other benefits of umbrella companies include:
- Manages all client payments, tax withholding and any social contributions
- Issues you a payslip each month, to a local or foreign account
- Sponsors work permits
- Helps set up the contract with the client
- Moderates any disputes with your client
- Advises on access to totalization and double taxation treaties
If you have questions about how an umbrella company can help you as an international contractor, please contact us at Contractor Taxation.
