[Q&A] Compliance Risks in Temporary Labour
2025. 6. 6
Question: How can employing enterprises avoid the risk of false claims (fraudulent invoicing) when hiring gig workers?
Answer: Many enterprises engage gig workers (temporary labour) through digital platforms, which helps alleviate staffing shortages to a certain extent. However, in practice, some companies have faced tax audits, additional tax assessments, late payment penalties, and even criminal liability due to non-compliance with legal requirements.
Fraudulent invoicing refers to the act of issuing falsified special value-added tax (VAT) invoices or other forged invoices to fraudulently claim export tax rebates, evade taxes, or other similar behaviours. This includes inflating invoices for others, inflating invoices for oneself, arranging for others to inflate invoices, or facilitating such activities. In recent years, such cases have become relatively common in the gig economy sector.
From the perspective of employing enterprises, mitigating false claims risk primarily requires attention to the following aspects:
· Ensuring Business Authenticity
Enterprises must establish formal written contracts with platforms based on the specific gig worker engagement model. At the order placement stage, they must verify that the order details match the actual services rendered. When receiving invoices, the amounts and descriptions must align with the true transaction. Additionally, all supporting documentation must be retained for potential tax authority inspections.
· Verifying the Platform’s Tax Withholding Credentials
Under the provisions of the Detailed Rules for the Implementation of the Tax Collection and Administration Law, tax authorities may, for administrative efficiency and taxpayer convenience, delegate the withholding of small, dispersed, or cross-regional taxes to qualified entities, provided them with withholding certificates. In gig worker arrangements, tax authorities often authorise platforms to withhold taxes on workers’ earnings under formal agreements.
Before entering into service contracts, employing enterprises should verify the platform’s compliance credentials, either through official announcements or by requesting withholding qualification certificates, to confirm its legitimacy.
Answer: Many enterprises engage gig workers (temporary labour) through digital platforms, which helps alleviate staffing shortages to a certain extent. However, in practice, some companies have faced tax audits, additional tax assessments, late payment penalties, and even criminal liability due to non-compliance with legal requirements.
Fraudulent invoicing refers to the act of issuing falsified special value-added tax (VAT) invoices or other forged invoices to fraudulently claim export tax rebates, evade taxes, or other similar behaviours. This includes inflating invoices for others, inflating invoices for oneself, arranging for others to inflate invoices, or facilitating such activities. In recent years, such cases have become relatively common in the gig economy sector.
From the perspective of employing enterprises, mitigating false claims risk primarily requires attention to the following aspects:
· Ensuring Business Authenticity
Enterprises must establish formal written contracts with platforms based on the specific gig worker engagement model. At the order placement stage, they must verify that the order details match the actual services rendered. When receiving invoices, the amounts and descriptions must align with the true transaction. Additionally, all supporting documentation must be retained for potential tax authority inspections.
· Verifying the Platform’s Tax Withholding Credentials
Under the provisions of the Detailed Rules for the Implementation of the Tax Collection and Administration Law, tax authorities may, for administrative efficiency and taxpayer convenience, delegate the withholding of small, dispersed, or cross-regional taxes to qualified entities, provided them with withholding certificates. In gig worker arrangements, tax authorities often authorise platforms to withhold taxes on workers’ earnings under formal agreements.
Before entering into service contracts, employing enterprises should verify the platform’s compliance credentials, either through official announcements or by requesting withholding qualification certificates, to confirm its legitimacy.