Plan contractor hiring in China

For recurring business services, engage a mainland China contractor under its registered market identity and put the service, parties, and amount in a written contract. A person conducting for-profit activity as a market entity must register unless a specific legal exception applies. The contract and later invoice or payment notice should identify the same contractor, customer, service, and amount because the contractor's mainland bank reviews whether an inbound service receipt is genuine and consistent with its transaction records. These are contractor-side registration and receipt controls; the engagement does not by itself give the foreign customer a mainland entity.

Sources: State Council market entity registration regulation, SAFE current account foreign exchange guidelines, SAFE service-trade document review Q&A

个人所得税纳税申报表

Individual income tax return

The mainland resident contractor files this return with the tax authority when taxable personal-service income has no withholding agent, so the foreign customer should not treat it as a customer-issued certificate. Personal-service income can include design, testing, legal, accounting, consulting, and translation work. If this category applies, filing and payment are due by the fifteenth day of the following month. If the work instead produces business income through an individual industrial and commercial household or sole proprietorship, monthly or quarterly prepayment and an annual reconciliation apply. Confirm the contractor's income category before the first invoice.

Issued by: The contractor submits the return to the competent mainland tax authority.

Timing: Personal-service income with no withholding agent is filed by the fifteenth day of the following month; business-income advances are filed within fifteen days after each month or quarter, with annual reconciliation by 31 March.

Sources: Individual Income Tax Law, Individual Income Tax Law implementing regulation

全面数字化的电子发票

Fully digital electronic invoice

The mainland contractor issues the fully digital electronic invoice for a qualifying invoiced sale, and it carries the same legal force as a paper invoice. Its standardized content identifies the invoice, date, purchaser, seller, service item, amount, applicable rate, tax, total, remarks, and issuer. The contractor controls issuance through the mainland tax system; the overseas customer receives and checks the invoice against the contract and delivered service. Invoice type and VAT treatment still depend on the contractor's status, service category, and export facts.

Issued by: The mainland contractor issues it to the overseas customer through the tax invoice system.

Timing: Issue timing must follow the taxable event and the prescribed invoicing rules; an invoice issued before payment can advance the contractor's VAT liability date.

Sources: State Taxation Administration digital invoice announcement, Value-Added Tax Law

红字数电发票

Red-letter digital invoice

The mainland contractor uses a red-letter digital invoice to correct an issued invoice after an error, service suspension, return, or price reduction. Where the customer has already confirmed or accounted for the original invoice, either party can initiate the correction flow and the other party confirms it before the contractor issues the red-letter record. A confirmation request expires after 72 hours without confirmation. Keep the original, correction request, and red-letter invoice together so the contract amount, invoiced amount, and received amount remain reconcilable.

Issued by: The mainland contractor issues the red-letter record after the applicable correction and confirmation steps.

Timing: Start the correction when the error or adjustment is identified; a required counterparty confirmation expires after 72 hours if unanswered.

Sources: State Taxation Administration digital invoice announcement, Value-Added Tax Law implementing regulation

A mainland contractor's invoice treatment turns first on the service category and whether the overseas customer actually consumes the service outside mainland China. From 2026, listed services such as software, information systems, offshore outsourcing, design, and technology transfers can be zero-rated when sold to an overseas unit and wholly consumed overseas. Consulting, professional technical, business-support, telecommunications, and other listed services can instead be exempt. The actual recipient must be overseas, and the service must be unrelated to mainland goods, real estate, or natural resources. A contractor using export refund or exemption treatment must declare export refund or exemption within 36 months of the VAT liability event; if nothing is declared by then, the sale is treated as a domestic sale.

Sources: Ministry of Finance and State Taxation Administration 2026 export VAT announcement

What an invoice has to show

• The 20-digit 数电发票 number

  Without the national 20-digit number, a document cannot be checked as the fully digital invoice described by the nationwide announcement. Record the number in the customer's invoice register and use the same identifier when discussing a correction. This numbering rule is specific to 数电发票, so avoid applying it to a legacy paper or electronic format without checking that form.

  Sources: State Taxation Administration digital invoice announcement

• Buyer, seller, service, amount, and tax fields

  Missing buyer, seller, service-item, amount, rate, tax, total, date, or issuer information breaks the invoice's standardized transaction record and can frustrate matching to the contract. Use the foreign customer's correct legal identity in the purchaser field and the contractor's licensed identity in the seller field. Complete only fields that apply to the service and preserve any additional industry-specific information generated by the tax system.

  Sources: State Taxation Administration digital invoice announcement

• A truthful description of the actual service

  A description that differs from the real service violates the truthful-issuance rule and can undermine the contractor's selected export VAT category. Describe the actual work with enough specificity to connect the invoice to the contract, overseas recipient, and delivered result. Issue every required field in the prescribed time and order, and use the red-letter correction process if an issued description, amount, or service status later proves wrong.

  Sources: State Council invoice administration measures, State Taxation Administration digital invoice announcement

The contractor should bill on the milestones and due dates written into the services contract because those dates can trigger mainland VAT before cash arrives. VAT liability normally arises when the contractor receives the fee or obtains the right to claim it; an invoice issued earlier moves the tax point to the invoice date. The written contract's payment date defines that claim date, while a contract with no stated payment date can move it to service completion. Align acceptance, invoicing, and payment milestones so an early invoice or vague due date does not create an avoidable timing mismatch for the contractor.

Sources: Value-Added Tax Law, Value-Added Tax Law implementing regulation

When invoices are settled

The agreed payment date controls, so state an exact due date or milestone instead of relying on a universal mainland contractor term. For a result-based 承揽 contract governed by mainland law, the statutory fallback requires payment when the contractor delivers the work result if the date cannot be resolved from the agreement and related rules; partial delivery produces corresponding payment. Parties to a foreign-related civil contract may choose its governing law. Without a choice, the law of the characteristic performer's habitual residence or the law with the closest connection applies, making the governing-law clause central to whether this mainland fallback reaches the contract.

Sources: Civil Code of the People's Republic of China, Law on the Application of Laws to Foreign-Related Civil Relations

The currency on the invoice

The parties may settle the service fee in a foreign currency, while the mainland contractor must convert the VAT sales amount into renminbi. State the contract and invoice currency, amount, and any conversion convention clearly, then keep those terms consistent with the amount received. A foreign-currency fee therefore does not remove the contractor's renminbi tax computation. The VAT Law addresses conversion of non-renminbi settlement into renminbi; it does not provide every commercial exchange-rate or invoice-display choice, so the contractor should apply the tax method accepted for its filing position.

Sources: Value-Added Tax Law

Local currency rules

The contractor's mainland bank may require transaction records that prove the service is genuine and match the inbound receipt, especially above the equivalent of USD 50,000 for one service-trade transaction. At or below that amount, the bank generally may process without reviewing documents, yet it can still request them when the funds are unclear. Above it, the bank confirms that the transaction party, amount, and nature agree with the records. Keep a signed contract, invoice or payment notice, service description, amount, and contract or invoice number aligned. The threshold governs document review; it does not cap genuine business receipts.

Sources: SAFE current account foreign exchange guidelines, SAFE service-trade document review Q&A, SAFE service-trade declaration Q&A

Splitting one service fee around the document-review amount

Splitting a genuine service fee into smaller receipts to avoid foreign-exchange review can turn a document issue into a prohibited evasion method. The equivalent USD 50,000 amount is the per-transaction document-review boundary. It does not cap the contractor's annual business receipts. Keep the commercial payment schedule tied to real milestones and present the bank with the contract, invoice or payment notice, and service records when review applies. A larger authentic transaction can proceed through review without being disguised as several unrelated transfers.

Sources: SAFE current account foreign exchange guidelines

Paying an identity that differs from the contract and invoice

Using a payee name or account that does not match the licensed contractor and invoice seller can stop the mainland bank from reconciling the transaction party with the receipt. Verify the business licence, legal name, operator or investor, and unified social credit code before signing. Then use that same identity on the contract, invoice, receipt instructions, and any declaration document. If the contractor changes vehicle or account, amend the contract and establish the new identity before sending the next fee instead of leaving the bank to infer the relationship.

Sources: Implementing rules for market entity registration, SAFE current account foreign exchange guidelines

Calling every deliverable consulting on the invoice

Using a generic service label can leave the contractor unable to support the chosen zero-rate or exemption category and the overseas-consumption test. Describe the actual service, deliverable, overseas recipient, and place of consumption consistently across the contract and invoice. For the 2026 export rules, the actual recipient must be overseas and the service must be unrelated to mainland goods, real estate, or natural resources. Declare export refund or exemption within 36 months of the VAT liability event; if nothing is declared by then, the sale is treated as a domestic sale. Keep the service and receipt records that support the declaration.

Sources: Ministry of Finance and State Taxation Administration 2026 export VAT announcement, State Council invoice administration measures