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Social Insurance in China: Tips for Enterprises

Updated:2018-12-7 10:59:52    Source:www.tannet-group.comViews:525

Social insurance in China will embrace a new change from January 1, 2019. In the past, local tax bureaus in many cities began collecting social insurance contribution payments on behalf of the social insurance bureau. However, under the new rule, the tax bureau will have much more responsibility: the tax bureau will be in-charge of social insurance collection and will check if the social insurance contribution base corresponds with the payment amount.

Contribution Rate of Social Insurance
On September 6, 2018, the authorities of State Council stated that they would consider an appropriate reduction to the social insurance contribution rate. Following that announcement, the human resource and social insurance bureaus on October 31 announced that they would discuss the requirements for reducing social insurance rates, raised during the State Council executive meeting.

On November 2, the State Council announced the first update for lowering social insurance contributions: the total employer and employee contribution for the unemployment insurance rate will be reduced in phases from 3% to 1%. Originally, this policy was set to expire by the end of April 2019, but it will be extended.

Tips for Enterprises
1. Employers that pay the minimum social insurance contributions for employees need to be careful with calculations because the tax bureau will be able to spot short payments.
2. Employers that have not treated social insurance contributions for dispatched employees or low-cost workers seriously need to review their practices immediately because the tax bureau will inspect all salary related information, personal data, and social insurance information together with the company’s tax information.
3. Employers need to register and pay social insurance for employees in company-registered cities because the tax bureau will identify grey practices.
4. Employers need to treat the new collection method seriously because the tax bureau can affect business-as-usual if social insurance payments are not done on time and in full.
5. Employers should be aware that in recent years the authorities have increased penalties for companies that are not compliant with social insurance regulations, particularly for non- and under-payment, and we expect these penalties to become more severe after January 1.

Social security is a complicated but unavoidable issue in employer-employee relationship management for businesses operating in China. Tannet can help you make the recruitment, hold staff training lecture, manage payroll outsourcing and social security. We provide a full range of services to help you do business in China.

Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.

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