Key features of our China employment solutions :
- Fast market entry (onboard staff within days, guided by experienced professionals ) ,
- Compliance ( avoid local foreign exposure, services provided by local experts )
- Holistic Solution ( End to end support, benefitting your company and your staff )
- Streamlined Process ( reduces the cost, resources required to maintain a presence )
- Scalable ( from a single employee to large teams, with fixed, easily forecast fees )
So who uses our PEO / EOR solutions in China ?
They may be companies who are:
- Testing the market
- Moving independent contractors to more compliant solutions
- Post-merger restructuring
- Hiring staff for a short or fixed term
- Streamlining operations across multiple countries
- Fast-tracking market entry
- Making the first step before entity establishment
- Seeking to reduce overheads
- Dispatching staff to their client’s location.
Our Services
- Structuring Advisory
- Human Capital Management
- Accounting and Payroll
- Tax Compliance Services
- Establishment of Local Entities
- Ad Hoc Consulting
Income Tax in China
The Chinese tax year is from 1st January to 31st December. An individual income tax return needs to be made to the tax authorities between March 1st and June 30th, for the prior tax year.
In China, the employer is required to withhold income tax from payroll and submit a withholding tax return together with the taxes withheld to the tax authority on a monthly basis.
Cummulative Income Tax Rates
| Cummulative Taxable Income (RMB) |
Income Tax Rate |
| Up to 36,000 |
3% |
| 36,001 – 144,000 |
10% |
| 144,001 – 300,000 |
20% |
| 300,001 – 420,000 |
25% |
| 420,001 – 660,000 |
30% |
| 660,001 – 960,000 |
35% |
| Above 960,001 |
45% |
Current as of January 2021. This for information purposes only.
An individual is considered a resident for tax purposes and subject to the above tax rates if he/she has been physically in China for a period of 183 days or more during the calendar year or have a Chinese address as their registered domicile. A resident is taxed on income sourced in China and outside of China.
A non-resident for income tax purposes is generally anyone who has been physically in China for less than 183 days in the calendar year and not having a Chinese address as their registered domicile.
A non-resident is taxed only on income sourced in China at the following rates:
| Cummulative Taxable Income (RMB) |
Income Tax Rate |
| Up to 3,000 |
3% |
| 3,001 – 12.000 |
10% |
| 12,001 – 25,000 |
20% |
| 25,001 – 35,000 |
25% |
| 35,001 – 55,000 |
30% |
| 55,001 – 80,000 |
35% |
| Above 80,001 |
45% |
Current as at January 2021. This for information purposes only.
Social insurance calculations in China may be complex. Eos is pleased to assist in calculating the required contributions depending on the city of employment. Eos is also pleased to manage your payroll for you and to make necessary remittances to the regulatory authorities. We would be pleased to further discuss.
Hiring foreigners – Immigration in China
All foreigners working in China must have appropriate approvals from the Chinese authorities.
A local employer must sponsor employees for Short-Term Work Permits. If an employee must visit a client site and conduct project-related, hands-on activities for 90 days or less, a Short-Term Work Permit may apply.
For long stay assignments, most foreign nationals working in China must obtain a Z Visa, Work Permit Card, and Residence Permit (when working in China for longer than 90 days). Initially, the company must apply for and obtain a Notification Letter on behalf of the foreign national. Upon issuance of the Notification Letter, the foreign national may apply at a Chinese Consulate for a Z Visa, which is the single-entry visa issued to foreign nationals intending to work in China.
The regular Work Permit Card must be applied for at the Expert Bureau within 30 calendar days of arrival in China. Upon approval of the Work Permit Card, the Residence Permit must then be obtained from the local authorities. The foreign national is legally authorized to begin employment upon receipt of the Work Permit Card and Residence Permit, which the employee must retain at all times. The Residence Permit is for foreign nationals residing in the country for more than 90 days while working with either a short or long-term Work Permit and allows the holder to leave and return to China, in addition to evidencing the holder’s permission to stay. Employees are not permitted to travel outside of China before
Work Permit Cards are issued under three categories – A, B, and C– and are based on a scoring system that will consider, among other criteria, an applicant’s income, work experience, educational background, Chinese language skills, age and duration of stay. The permit categories are unified under one Work Permit Card. According to current rules, Category A employment permits will be reserved for those with scores of 85 or above, B permits for those with scores of 60-85, and C permits for those with scores less than 60. The government may alter application requirements among the different types of employment permits to encourage Category A applicants, control the number of B applicants and limit C applicants.
Exceptions for Certain Residents: Residents of Hong Kong, Macau, and Taiwan are exempt from the Work Permit requirement and they can obtain a Residence Permit Card if intending to work or study in mainland China for more than six months. Hong Kong, Macau and Taiwan residents holding a Tong Xing Zheng can enter China with their passports and travel permits and then file the application for the Residence Permit at the local Public Security Bureaus when necessary. The processing time is 20 business days. There are no additional documentation requirements for Hong Kong, Macau, and Taiwan residents entering China for short-term work.
Within 24 hours of arrival, the employee and dependents must register their residence with the Chinese authorities. A Residence Registration Certificate is required and is provided either by the hotel or service apartment, the management office of the employee’s residence or by
Payroll/Contract Requirements
|
Work Permit Card |
| Payroll Requirement |
Foreign or Local Payroll may be allowed depending on the type of employment agreement |
| Contract Requirement |
Local Contract or Secondment Agreement |
| 3rd Party Client Site
Allowed |
Yes, as long as the client site is within the city/region where the Work Permit Card was issued |
| Minimum Salary Req. |
To obtain a work permit , there is a minimum request on the salary and the specific amount is depending on the individual’s education level, work experience, industry, Chinese language skills and other factors. |
At the end of the employee’s assignment, both work and residence permits must be canceled/deregistered within 10 calendar days. In the case of early employment termination, the employee and the employer must submit a notification for cancellation. Upon departure from China, in certain provinces, the employee must cancel the residence permit and obtain a temporary visa that allows the employee to remain in China for up to 30 calendar days before leaving the country. The work permit should be returned to the local Labor Bureau or Expert Bureau.
In order to qualify for a work permit card, the foreign national must have a locally registered company acting as a sponsor in the same location where employment will take place. Companies should register an account on the official website of the Foreign Expert Bureau, register with the Administration of Industry and Commerce of China and obtain a Business License. The Provincial Labor Bureau must approve any subsequent change to the entity (e.g. name change). The same registration rules apply for local hires, intra-company transfers and seconded employees.
Foreign-funded joint-venture Enterprises must obtain a Certificate of Approval from the local Ministry of Commerce (MOFCOM). In some cities, foreign-funded and joint-venture companies must have a valid Registration Book with the city Entry-Exit Administration.
Hiring and Termination of Staff in China
Industrial relations in China is complex and mostly regulated by the Employment Contract Law. The law applies to Chinese and foreign employees.
Employment Contracts: A written employment contract signed by the employer and employee is mandatory. The contract must specify the employee’s compensation, benefits, duration of employment (if fixed term), working arrangements, and termination processes. The contract must be provided in Chinese. It is possible to also have a foreign language contract but the Chinese contract will prevail during any legal action.
Contracts may be either fixed-term or indefinite. The law stipulates that a fixed-term contract may only be extended once after time the contract will convert to an indefinite contract. Individuals employed under either a fixed-term or indefinite contract have the same statutory protections.
It is important to note operating without a contract in place exposes the employer to potentially severe penalties. For example, if the employee is permitted to work for more than one month without a contract is in place, the employer is liable to pay the employee double. If no contract is in place for 12 months or longer, it is deemed that the employer and employee have entered an indefinite contract with all the protections to the employee that prevails.
Eos will provide a standard template, compliant under local labor law. We can revise this to include certain terms and conditions at your request, as long as they are acceptable under China law
Probation Periods: Probation periods are not mandatory but are usually included in an employment contract. Probation lengths are generally:
- Contract of employment up to 12 months: One month
- Contract of employment from 12 months to three years: Two months
- Contract of employment from three years or longer or for an indefinite contract: Three months
Working Hours: The standard working week in China is 40 hours per week or 8 hours per day.
Overtime: Non-management staff is eligible for overtime at 150% hourly rate on week days, 200% hourly rate on weekends, and 300% hourly rate on public holidays.
Notice Period: 30 days in advance notice is required by law for both employer and employee in the event of a peaceful termination upon mutual agreement. 3 days in advance for the probation period.
Termination of employees in China is extremely complex. It is essential there is a strong cause for dismissal, such as performance-based or misconduct, and clearly documented grievances leading up to the termination. The initial employment contract must contain an agreed-upon remediation period that may last for up to six months.
Employees working for a company for over two years require notice of one week for each year of completed service up to 12 weeks of notice.
Employers have the option of including “payment in lieu of notice” in employee contracts which permit employers to pay employees instead of providing them with a notice of termination. This is common in Chinese business practice.
Other Notes:
- Public holidays – 31 days in 2021
- Annual leave – 5 days after 1 year of employment, 10 days after 10 years of service, and 15 days after 20 years of service.
- Maternity leave – Eligible mothers are entitled to 98 days of paid maternity leave
- Paternity leave – Eligible fathers are permitted paternity leave. The permitted period is dependent on location.
- Sick leave – The employee is entitled to enjoy sick leave ( partially paid) base on a doctor’s notice. For severe medical conditions, employees could enjoy 3 months sick leave after working in the company for 1 year, and 1 more month for each serving year, 24 months is the longest sick leave.
- The minimum salary is set by region
- Payroll – salary must be paid at least once a month
- Payslip – must be provided online, PDF or paper formats
Are you ready to take your next step in expanding into China?
The Eos team will discuss your goals with your management team and help you define your strategy in a local context. We can then provide a PEO/GOE proposal with bespoke services aimed at getting you where you want to be.
Once you`re ready, your staff will be onboarded with locally compliant employment contracts customized with your preferred terms and conditions. Any visa issues for your ex-pats and their dependents will be managed by Eos immigration professionals to ensure a smooth start to their new deployment.
From there, we will manage the payroll, tax, and benefits like any employer, based on a monthly consolidated invoice for salaries, expenses, and services, so you can get on with your primary goal – growing your business !
Please note that the information provided is for your general guidance only and Eos accepts no liability for its contents. It is important to seek professional advice for specific questions that affect your individual situation.
