I am running a company here in Taiwan and would like to hire a freelancer. Now I just need to know how on earth that is done the legal way. Ie. No cash under the table or anything.
What is the proper way of hiring a freelancer to do some temporary work? The freelancer is not a registered company so he wont be able to provide a proper “taiwan-style” invoice. :?
The best thing is probably to get in touch with an accounting company who should be able to give you detailed information. I’ve been told that it is okay for freelancers and boss if the freelancers simply sign an informal receipt over the amount received. And, don’t nail me on this but I believe as long as the amount is lower than NT$ 40,000, no VAT applies.
PM me if you want the contact details of my accounting company.
HTH
Iris
First, depends on what services the freelancer is offering and whether they are permitted to offer such services in the first place. Assuming it is for writing documents for you (as an example) tax needs to be witheld on payments made from your company in Taiwan to the freelancer (no matter whether they are overseas or in Taiwan.) The witholding rate is linked to their status as a Taiwan resident (same as Income tax applied to salaries.)
They are taxed according to the type of service (a writer would be tax category 9B, for example). Professional services (such as accounting) would be categorized under 9A.
The freelancer doesn’t need to provide you with an invoice for you to pay him. As long as you pay the tax, that’s pretty much all the gov’t cares about.
[Moderator’s note: the concept of “resident” under the Income Tax Law is different from the concept of “resident” under the Immigration Law. Be aware of this.]
The service would be programming and valued at about NT$350,000. The freelancer is a Taiwanese resident.
There’s the situation, now how can I find these taxation categories myself? What would be the authority/organization that decides this? Is it decided at government level or by county/city level?
Just pay him/her salary. You could spread it out over many months if desirable.
If anyone tells you that you cannot pay “salary” to a foreigner who does not have a work permit, they are mistaken. The tax authorities could care less if a foreigner has a work permit.
Of course, withholding should be taken at the appropriate rate, probably 10% or less.
Oddly though, the tax category stated will affect a freelancer’s ability to claim tax back at the end of the tax year. For my freelancers, all category 9B payments (gao fei) are fully refundable, whereas photographic services (which fall into 9A) are not refundable. At least this is the case where the freelancer is not a Taiwan resident and his/her total taxable Taiwan income for the year is very low. Are payments in the “salary” category fully refundable?