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China Payroll Guide

Overview

Also known as the People’s Republic of China (PRC), located in East Asia, China once had the largest economy for most of the past two thousand years and now stands as the most populated country in the world.
Currently China has an estimated $23 trillion worth of natural resources, 90% of which are coal and rare earth metals. It is the world’s 2nd largest economy in nominal Gross Domestic Product (GDP) and the largest economy in Purchasing Power Parity (PPP).
The Chinese state consists of 22 provinces, 5 autonomous regions, 4 direct controlled municipalities (Bejing, Tianjin, Shanghai and Chongqing) and special administrative regions of Hong Kong and Macau

 

China Payroll Facts

  • Population : 1.404 Billion
  • Working Population : 897.29 Million
  • Currency : Renminbi (widely known as Chinese Yuan)
  • Minimum Wage : varies by province
  • Identity Number : ID number
  • Number Of Pay Periods : 12
  • Main Languages : Standard Mandarin
  • Capital City : Beijing
  • Big Mac Index : $3.05
  • Fun Fact : Put together, all of China’s railways lines could loop around earth twice.

Taxes

Tax year – January 1st to December 31st.
There are specific rules for payroll and taxation in China, depending upon whether your company employs foreign nationals or local Chinese employees.

The primary concerns for a foreign company that needs to comply with tax laws in China include:

Individual income tax (IIT) for employees in China,
• Social security costs,
• Payroll tax,
• Sales tax,
• Withholding tax,
• Business tax and
• Permanent establishment concerns.

Employers and employees are required to contribute to China’s mandatory social insurance schemes.

This includes: pension insurance, medical insurance, industrial injury insurance, unemployment insurance, and maternity insurance – as well as to its ‘Housing Fund,’ which allows Chinese employees to save money towards purchasing their own home.

 

China’s personal income tax rates

Taxable income Tax on this income
Up to 36,000 CNY
3%
36,000 to 144,000
10%
144,000 to 300,000
20%
300,000 to 420,000
25%
420,000 to 660,000
30%
660,000 to 960,000
35%
960,000
45%

Healthcare & Benefits

For work-related injuries or occupational diseases, the employer and the work-related injury insurance fund (operated by the government) assume their liabilities respectively under the Provisions on Work-related Injury Insurance.
The costs incurred by the employer in this respect cannot be recovered from the government. Sick pay cannot be recovered if it has been paid for a non-work related illness or injury.

 

Work Leave & Holidays

    • Employee has more than 1 and less than 10 years of cumulative work experience: 5 days annual paid leave

 

    • Employee has more than 10 and less than 20 years of cumulative work experience: 10 days annual paid leave

 

    • Employee has more than 20 years of cumulative work experience: 15 days annual paid leave

 

    • The statutory national holidays and rest days are not included in the annual leave. Employees can also apply for sick leave, marriage leave, and funeral leave, when applicable.
    • Maternity leave: Natural childbirth: 98-day maternity leave, including 15 days leave that may be taken before delivery.

 

    • Paternity leave: Paternity leave in Shanghai is 10 days while in Guangzhou and Beijing is 15 days.

 

China's Public Holiday Schedule
January 1st
New Years Day
Eve of 1st Lunar Month
Chinese New Year’s Day
1st - 4th day of 1st Lunar month
Chinese New Year Holiday
April 1st - 2nd
Ching Ming Holiday
May 1st
Labor Day
May 27th - 29th
Dragon Boat Festival
October 1st - 3rd
National Day Holiday
October 4th
Moon Festival/Mid Autumn Festival
October 5th - 6th
National Day Holiday

 

To learn more about Chinese tax and payroll speak with one of the Immedis experts.

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