China Brings Expats Into Social Security Net

By ExpatBriefing.com Editorial 03 June, 2011

The government has confirmed that China’s social insurance law will be extended, from July 1, to cover expatriate workers living in the country.

The social insurance law gives all employees the right to pension, medical, work injury, unemployment and maternity insurance. The Ministry of Human Resources and Social Security has said that, with the new stipulation, foreign employees will also be able to have the same social insurance benefits as Chinese residents.

It is expected that all of the 600,000 expatriates working in China for longer than six months will now be liable for monthly contributions, which are payable by both employers and employees. However, the Ministry also intimated that employees from those countries with bilateral social insurance agreements with China (currently, said to be only South Korea and Germany) will be able to avoid paying contributions.

It is reported that the government is anticipating a possible future problem arising out of China’s rapid economic growth. While, previously, expatriates were largely on short-term, well-paid salaries and were supported, for example, by international medical insurance, the country is now also drawing in workers from other Southeast Asian nations. These new workers are likely to be unskilled economic migrants without insurance support from their employers.

Furthermore, it has been pointed out that the details are not yet certain on how the new contributions will be collected. It is not known whether contributions will be paid by all expatriate workers, even those seconded and not on local contracts, and whether the guidelines given in the social insurance law could be liable to changes when applied locally. The detailed regulations to apply the law have yet to be issued.

A comprehensive report in our Intelligence Report series devoted to a study of the ways in which expatriate executives and employees can optimise their remuneration and taxation situations in a number of the main English-speaking countries is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report10.asp

Tags: Individuals | Expatriates | Tax | Law | Insurance | Employees | China | Health Care | Legislation | Social Security | Regulation |

 





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