Understanding Social Security Provisions in China

Understanding Chinese Social Security Laws

For foreigners residing and working in China, social security contributions will principally depend on the state that you are working in. For instance, foreigners living and working in Shanghai are exempt from the five main social security contributions that locals must pay. However, those living in Dalian are required to contribute towards pension and medical insurance. However, foreigners living in Dalian will be required to pay housing insurance. The foreigners willing to pay housing insurance will not be refused to do so.

Legal Basis of China’s Social Security Insurance

The social security system of China is based on the social insurance law that was enacted in the year 2011. There are five different categories of insurance that workers in the country are required to contribute to. These include pension, medical insurance, maternity insurance among others. The other social security insurances that you have to contribute when working in China include work-related injury insurance and also unemployment insurance. Moore MS Advisory can help you understand the social security provisions in China.

Social Security Exemptions for Foreigners

The Chinese government is a signatory to the tax treaty where some foreign nationals working in China are exempt from paying some social security insurances. However, for this to apply to you, it is crucial for the government of China to sign such a treaty with your home country. The foreign tax relief can be very beneficial for foreigners working in China because they will not have to be subjected to double taxation. This implies that you will not have to be subjected to double social security taxation both in your home country and in China where you might be currently working. Essentially, this might save a foreign worker thousands of dollars. Understanding the numerous social security exemptions that are applicable to foreigners working in China is very important. This is because it will inform some of the decisions that you make while you are in China, like the state that you want to work and live in. To understand more about the process, consult with an advisory firm which has a lot of experience in the country.

Bilateral Social Security Agreements with Other Countries

Section 97 of the Chinese Social insurance law is very clear that foreign individuals working in China have an obligation to contribute to all the five main social insurances. This means that an employer who has engaged a foreigner has to contribute to all the five insurances. That said, China has entered into bilateral agreements with a number of countries that exempt people from those countries to contribute to social security. These countries include Germany, South Korea, Canada, among others. However, for implementation to take place, both of the countries must have concluded the domestic procedures necessary to facilitate the implementation. This means that such countries must always ratify the social security agreement with the Republic of China for it to be operational. For any individual that wants to take advantage of the exemptions, there is a certain process that has to be undertaken. This means that they ought to apply for the exemptions to take advantage of them. Fortunately, the process will usually be determined within a short period of time and you do not have to wait for long.