Following a recent change in tax and pensions in China, non-Chinese employees and their employers could be faced with massive additional expenditure. On 15th October, changes in the law came into force which require non-Chinese employees to make a contribution of 11% of their salary to the Chinese social security pool, with their employers being required to contribute 37%. The monthly payments are capped at between 9,000 yuan and 11,600 yuan, depending on the location of the employment,. meaning that employers could be liable to pay up to an additional £14,000 per employee per year.
These changes have been heavily criticised, and their implementation has caused confusion in the market with the deputy head of the Chinese Ministry for Human Resources having conceded that local government has not yet made full arrangements for receiving the payments or registering people. What is clear, however, is that this could result in massive additional cost for Chinese companies, so this is clearly something to watch for Chinese companies employing, or thinking about employing, non-Chinese staff.