Resident Tax Information
Navigating China's tax landscape is crucial for compliant and successful business operations. While residents are taxed on their worldwide income, employing top talent in China involves understanding and fulfilling specific tax obligations. This is where Employer of Record (EOR) services can significantly simplify the process.
Key Tax Considerations:
-Income Tax:
--China applies progressive tax rates ranging from 3% to 45% on all resident income sources.
--EORs accurately calculate and withhold income taxes for your employees, ensuring compliance with local regulations.
--Common deductions and credits include education expenses and charitable donations.
Foreign tax credits may apply for employees with income from countries with double taxation agreements.
-Social Security Contributions:
--Employers and employees both contribute to social security programs, including pensions, medical insurance, unemployment, and more.
--EORs manage these contributions effectively, ensuring your employees are covered and your business meets its obligations.
-EORs as Your Tax Compliance Partner:
--EORs assume the role of legal employer, taking full responsibility for tax compliance, payroll, and related filings.
--They stay updated on tax laws and regulations, mitigating risks and ensuring accurate and timely payments.
--This frees you to focus on your core business operations while having peace of mind regarding tax matters.
Additional Considerations:
-Tax Filing and Payment:
--EORs handle tax filing and payment on your behalf, simplifying the process and ensuring deadlines are met.
-Foreign Tax Credits:
--EORs can advise on potential foreign tax credits for employees who have paid taxes in other countries.
-Staying Informed:
--EORs provide regular updates on tax changes and regulations, keeping you informed and compliant.
By partnering with an EOR, you can navigate China's tax landscape with confidence, ensuring accurate compliance and a seamless experience for both you and your employees.
The income taxes for residents of China are below —
The income taxes for non-residents of China are below —
Social Security
There are five mandatory insurance categories for the social security in China —
A housing fund will also need to be provided to local employees
Pension insurance
The contributions towards the pension insurance must be for 15 years or more to enjoy any benefits. In China the retirement age 60 years for male employees, and 55 for women employees. EORs handle contributions and manage pension fund accounts for your employees, securing their future retirement benefits.
Medical insurance
In order to make sure that employees are covered in case of emergencies, their employer and insurer pay monthly into a medical insurance fund. The employee can then use these funds for expenses like hospital treatments or doctor's visits with no out-of pocket costs on top of what they've already paid towards the plan. EORs manage maternity leave payouts and medical coverage, easing the burden on both employee and employer.
Work-related injuries insurance
All employers must contribute toward the work-related injuries insurance. Employees need not contribute toward this fund. The monthly contributions will vary depending on the industry you operate in. EORs manage work-related injury and illness compensation, mitigating risks and protecting your business.
The work-related injuries insurance in China typically covers –
Maternity insurance
Employees on maternity leave in China receive maternity pay which the maternity insurance fund funds. The employers make mandatory monthly contributions towards the maternity fund. An employee to be eligible for maternity benefits, the employer must contribute a minimum of 3 months of the employee's average monthly salary. EORs manage maternity leave payouts and medical coverage, easing the burden on both employee and employer.
Housing fund
Statutory Benefits
Employers in China are required to provide statutory benefits as part of an employee compensation package. These social insurance programs revolve around the State Social Insurance System, which was established by law and provides for workers' medical care coverage with one key exception: it does not cover self-employed individuals or freelance professionals like architects who work on their own terms instead relying entirely upon earnings from clients referrals alone (without any formal contract).
China's social security system is a vital part of the country’s infrastructure. The mandatory contributions from both employers and employees make up one-third to half of all revenue collected by this office, which administers state sponsored insurance plans in 16 different regions across mainland China.
Partnering with an EOR unlocks China's talent pool with confidence. You can attract and retain top talent with comprehensive benefits, all while navigating social security obligations smoothly.
Focus on your business growth, leave the complex compliance to your EOR. It's a win-win for you and your employees in China.
Simplifying the Landscape:
- EORs act as your trusted legal employer in China, assuming full responsibility for managing social security contributions.
- No more worry about navigating regional variations or compliance hassles. EORs take care of everything, from calculating rates to timely payments.
-Focus on building your business, secure in the knowledge that your employees are fully covered by essential benefits.
Benefits Covered, Compliance Guaranteed:
- Medical Insurance: EORs ensure your employees have access to quality healthcare through comprehensive medical insurance plans.
- Pension Insurance: Secure your employees' future with contributions to their retirement funds, handled seamlessly by your EOR.
- Unemployment Insurance: Minimize disruption in case of job loss with EOR-managed unemployment benefits.
- Work Injury Insurance: Mitigate risk and protect your business with EORs managing work-related injury and illness compensation.
- Maternity Insurance: Support mothers during this critical time with EORs handling maternity leave payouts and medical coverage.
Beyond Compliance, Added Value:
- EORs streamline administration, relieving you of time-consuming paperwork and bureaucratic hurdles.
- Cost transparency eliminates hidden fees and simplifies budgeting.
- Reduced financial risk as EORs take responsibility for potential non-compliance issues.
The Chinese Social Security provides the following benefits —
- Pensions after retirement
- Industrial insurance for accidents at work (temporary and permanent disability)
- Medical insurance for sick pay and hospitalization benefits
- Maternity insurance that covers maternity pay
-
Fringe Benefits
Common fringe benefits include:
- Commercial health insurance
- Supplementary housing insurance
- Accidental death and disability benefits
A few less commonly provided fringe benefits include-
- Meal vouchers or office canteens
Retirement benefits
Commercial health insurance
Flexible working hours
Supplementary housing insurance
Accidental death and disability benefits
Travel allowances
Meal vouchers or office canteens
Exempt Benefits
A few benefits in China have exemptions from being taxed. The exempted benefits
include —
- Social security contributions
Long-term Incentives
Long-term incentives are commonly provided to employees for a time horizon of 12 months or more. Long-term incentives in China are commonly provided to employees in a senior positions. Commonly provided long-term incentives in China include
- Performance-based incentives
- Group Employee stock options: Common types of stock options offered to employees in China include —-term disability insurance
.svg)
