China’s social security system is a complicated but unavoidable requirement that can confuse many foreign-invested companies and their employees. With China frequently updating its labor laws and regulations, detailed attention to the labor and employment laws is crucial for staying compliant and operating your business in China.
When hiring employees in China, employers must abide by relevant laws and regulations and as such are required as well to make contributions to social security and the housing provident fund. In this article, we provide an extensive overview of China’s social security system and the housing provident fund from an employer’s perspective.
In the past, working in mainland China for Hong Kong, Macau, and Taiwan (HMT) residents meant they had to obtain a work permit. Now China has reduced red tape.
Determining Individual Income Tax (IIT) and Social Security of local staff is relatively easy, when it comes to foreigners this become increasingly complicated. We have seen many times foreign companies struggling to have a good understanding about these specific rules and regulations and as a result pay on the hand too much taxes in the home country, and too little taxes within China.
For many foreign companies, China’s legal and tax environment on hiring & paying staff is very different. As a result, we have seen that many foreign companies have been facing difficulties to manage their HR administration and ensuring compliance in their organization.
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