The tax category is determined according to the business substance, not a unified "labor service fee".
For example: Construction labor outsourcing: construction services (applicable to 9% VAT rate);
Outsourcing of cleaning, security and logistics services: living services or human resource services (applicable to 6% VAT rate);
Transportation and warehousing outsourcing: determined according to business substance, 9% for transportation services and 6% for logistics auxiliary services.

General taxpayers: Calculate tax in full amount according to the corresponding tax category, no deduction of balance, and can issue special VAT invoices or ordinary VAT invoices in full amount.
Small-scale taxpayers: A reduced VAT rate of 1% is applicable (from January 1, 2026, to December 31, 2027, small-scale taxpayers pay VAT at a reduced rate of 1%) on the full amount.

The product name must be consistent with the business (e.g., "Construction Services - Labor Subcontracting"); it is strictly prohibited to issue invoices with the vague description of "labor service fee/dispatch fee".

Compliance is premised on the consistency of acceptance documents, contracts and capital flows.
Invoices shall be issued in full amount, with total consideration as the sales volume and no deduction items.

Tax category: Modern Services — Business Auxiliary Services — Human Resource Services
Qualification: Labor Dispatch Business License is required

General taxpayers: The 5% simple tax calculation method is abolished; the balance general tax calculation method at a 6% tax rate is uniformly applied.

Sales volume = total consideration - agency payment of salaries, social insurance and housing funds.

It is mandatory to adopt the method of "tax calculation on balance - invoice issuance on balance": the full amount and deduction amount shall be specified in a single invoice, and "Tax Calculated on Balance" shall be printed in the remarks column; only the balance part can be issued as a special VAT invoice, and no special VAT invoice shall be issued for the deduction part.

Small-scale taxpayers: The balance tax calculation method is abolished; tax is calculated at a reduced rate of 1% on the full amount (from January 1, 2026, to December 31, 2027, small-scale taxpayers pay VAT at a reduced rate of 1%). Special or ordinary VAT invoices can be issued, with no deduction amount indicated.

Single invoice system: the full amount and deduction must be specified in the same invoice; separate invoices is strictly prohibited.
The balance part (service fee) can be issued as a special VAT invoice, and the agency salary and social insurance payment part can be issued as an ordinary VAT invoice or indicated as non-taxable on the same invoice.

Tax category: Modern Services — Business Auxiliary Services — Brokerage Agency Services (human resource agency)
Major change in 2026: The 5% simple tax calculation method is abolished, and the 6% general tax calculation method is uniformly applied. Tax is only levied on the service fee, and agency salary payment and social insurance payment are not included in the sales volume and are non-taxable.

General taxpayers: Adopt the 6% general tax calculation method, with tax levied only on the agency service fee; agency salary payment and agency social insurance and housing fund payment are not included in the sales volume, and no special VAT invoice shall be issued for such amounts, while ordinary VAT invoices or receipts can be issued.

Small-scale taxpayers: Tax is calculated at a reduced rate of 1% only on the service fee (from January 1, 2026, to December 31, 2027, small-scale taxpayers pay VAT at a reduced rate of 1%). The sales volume only includes the agency’s service fee, excluding the amount of collected and paid on behalf of others. No special VAT invoice shall be issued for the collected and paid on behalf of others, while ordinary VAT invoices or receipts can be issued.

Only the service fee part can be issued as a special or ordinary VAT invoice; the agency payment and collection part can be deducted before tax with supporting documents such as agreements, bank statements and social insurance certificates.

Model	Tax Category	General Taxpayers	Small-scale Taxpayers	Core Invoicing Rules
Labor Outsourcing	Determined by business substance	Apply the corresponding tax rate, calculate tax on the full amount, and deductible input tax	A 1% levy rate on the full amount, non-deductible input tax	Issue invoices in full amount with the product name consistent with the business
Labor Dispatch	Human Resource Services	1. 6% general tax calculation: calculate tax on the full amount, and deductible input tax 2. 6% balance general tax calculation: Sales volume = total consideration - agency payment of salaries, social insurance and housing fund, and deductible input tax 3. The 5% simple tax calculation method has been abolished	1% tax calculation on the full amount: issue invoices in full amount	1. General tax calculation: issue 6% special/ordinary VAT invoices in full amount 2. Balance tax calculation: only the balance part (service fee) can be issued as a 6% special VAT invoice, and the agency payment part shall be issued as an ordinary VAT invoice 3. Receipts can be issued for the agency payment of salaries and social insurance with a complete supporting document chain
Human Resource Outsourcing	Brokerage Agency Services	1. 6% general tax calculation: sales volume only includes the service fee, and deductible input tax 2. The 5% simple tax calculation method has been abolished 3. Agency salary payment and agency social insurance and housing fund payment are not included in the sales volume	A 1% levy rate on the service fee only; sales volume only includes the agency service fee, non-deductible input tax	1. Only the service fee part can be issued as a 6% (for general taxpayers) or 1% (for small-scale taxpayers) special/ordinary VAT invoice 2. Agency salary payment and agency social insurance and housing fund payment: no special VAT invoice shall be issued; non-taxable ordinary VAT invoices (preferred) or receipts can be issued

The compliant selection of employment models is a core link for enterprises in risk prevention and control and cost optimization. Enterprises shall accurately distinguish the legal, fiscal and tax boundaries of the three models in light of their own business needs and employment characteristics, and rely on professional legal and fiscal teams to design contracts and control processes to achieve the dual goals of business development and compliant operation.