Chinese payroll process and HR come to the attention of our specialists, who can offer you the services you need for the company you own in this country. In this approach, the progressive tax system and, precisely, the individual income tax rates are taken into account. In the following lines, you will find important information about payroll in China, so that you can get an idea about this, with the mention that you can contact one of our accountants in China.
| Quick Facts | |
|---|---|
| What does a payroll specialist in China do? | Calculation of salaries and related taxes, and their distribution according to the policies and internal regulations of the company |
What is a payslip? | A document containing information about an employee’s salary, including the contributions owed to him |
Importance of a payroll system | All employee data, working hours, and days off are recorded through a payroll system to correctly calculate salaries before their distribution in the company. |
| Who signs the documents before the distribution of salaries in the company? | Company managers |
| When are salaries distributed in the company? | When payslips are issued and signed by the company management in charge. |
| Benefits for employees in China | – annual leave, – maternity leave, – paternity leave, – sick leave, etc. |
| Individual income tax | Ranging from 3% to 45% depending on the income |
| Annual paid leave in China | 5 days after one year of work in the company |
| Unemployment insurance | 0.5% |
| Pension contribution on behalf of employee | 8% |
| Medical insurance paid by the employee | Ranging from 2% to 10% rate, depending on the region/province in China |
| Content of a work contract | – type of activities, – company policy, – working hours, – remuneration, etc. |
| Minimum wage in China | Around CNY 2,320/ month in Beijing, and CNY 2,590/ month in Shanghai. Wages differ depending on the city. |
| 13th salary in China | Stipulated in the employment contract |
| Why choose our payroll specialists in China? | We offer complete payroll services at affordable prices, tailored offers depending on the size of the company. |
| Paid leave in China | 5 days per year after 10 years in the company |
Maternity leave in China | 98 days |
Sick leave | between 3 to 24 months |
| Currency | Yuan |
| Tax Year | Calendar year |
| Payslip | Digital or paper |
| Payroll cycle | Monthly |
| Tax filing | Monthly |
| Additional work days in China | Compensations are made for multi-day cultural celebrations |
| Tax considerations | Taxes vary depending on the region in China. A payroll specialist can tell you more. |
| Bonuses, benefits, and awards | Made in cash or kind |
| Standard annual deduction | CNY 60,000 to all residents |
| Itemized deductions | Only for Chinese residents, for education, mortgage interest payments, healthcare expenses, housing funds, etc. |
| Payroll and taxes for non-residents in China | Taxation is made only on the income registered in China. |
| Insurances in China | – maternity, – unemployment, – occupational accident, – pension, medical |
Table of Contents
Payroll procedures in China
Payroll services in China involve various procedures with the help of which salaries are calculated and distributed in the accounts of a company’s employees. The specialists in the Chinese payroll process use dedicated software and platforms for calculating salaries, taking into account the number of hours worked and related taxes. Below are other important aspects:
- Social security contributions are paid by the employee and the employer.
- Once these are calculated, the payslips are drawn up.
- Payslips include information about gross salary, related taxes, social contributions and net salary. Once drawn up, they go to the finance and management department for approval.
- With the help of programs dedicated to the Chinese payroll process, salaries are delivered to employees’ accounts, according to the rules established by the employing company.
Payroll services in China are important for a company, and if you need support in this regard, we recommend that you contact one of our accountants in China. We also help international investors set up a company in Chinaby handling the formalities. Here is an infographic with details about the payroll services we offer:
What exactly does a payroll specialist do in China?
When you want to open a company in China, you must consider the services offered by a reliable accounting firm. You can benefit from such services offered by a payroll specialist in China. Here are some of the aspects related to payroll for a newly established or already existing company in China:
- Employees are registered in the payroll system, with their names, functions, activities, work or profession identification codes.
- Along with the registration of data about employees, information about salary, hours worked, taxes, benefits, compensations, etc. is also passed.
- A payroll specialist must consider deductions and benefits that can be entered on the payroll.
- When the wages are calculated, the taxes paid by both the employee and the employer will be taken into account. The payroll process ends only after all the information has been verified and further accepted by the company’s managers.
- A payroll specialist uses dedicated programs and platforms for calculating and registering a company’s salaries. The process may take a few days, but the distribution of salaries should be done according to the company’s internal procedures.
- With the distribution of salaries in the company, each employee must also receive a payslip.
- We specify here that all this information must be recorded, archived, and kept in the company.
What are the contributions paid by the employee and the employer in China?
Both the employee and the employer must pay certain contributions to the state, and the following are imposed in most cities in China, except for the percentage for work injury, which in this case is available for Shanghai:
- Health fund – 2% employee, 3-12% employer;
- Pension fund – 8% employee, 14% – 22% employer;
- Occupational injury – 0.16% – 1.52% paid only by the employer;
- Housing fund – 5%-25% by both employee and employer.
Individual income tax is added to the above taxes, which vary according to revenues and also cities and regions. Thus, for incomes not exceeding CNY 36,000 per year, the income tax is set at a 3% rate. If the income exceeds the amount of CNY 960,000 per year, a tax of 45% is applied to the amount over this value and a deduction of approximately CNY 181,920.
We recommend that those interested in payroll in China contact us to find out all the information. Also, we are at your disposal with information about company formation in China.
How is paid leave calculated in China?
According to the employment contract that can be concluded between an employee and an employer in China, paid leave is determined upon the years of employment and is added to public holidays, as stipulated in the legislation. Here is some information in this regard:
- Employees who are in their first year are not entitled to annual paid leave.
- After concluding the first year up to the 10th year of work, the employee is allowed to have 5 days of paid leave,
- This increases to 10 days for employees with 10 to 20 years of experience and a maximum of 15 days for workers who have 20 years of work experience or more.
If you want to know more about paid leave in China, we recommend you talk to our specialists. We can provide information about payroll in China and related matters.
About the employment contracts in China
The Employment Contract Law in China stipulates all the conditions under which a work contract can be made. Let’s review the main obligations:
- In China, definite and indefinite work contracts, full-time and part-time agreements, plus project-based contracts are accepted.
- The work contract in China is made in written form and must include information about the employee and the employer.
- The same work contract must specify what kind of work is performed in the company, in what location, for what duration, what the salary is, and what protection is offered within the company.
- Employers in China can benefit from one month to prepare an employment contract. If this period is exceeded, the employer must pay double salary, as a penalty for the lack of a signed and registered employment contract with the relevant authorities.
- The work contract made in China must specify the rights of the employee in case of an accident at work.
- It is also necessary to specify the period remaining at the workplace after the conclusion of an employment contract, as well as the conditions in case of liquidation.
- Working hours, days off, sick leave, and maternity leave must also be found in the employment contract.
It is important to note that in China, there is the possibility of concluding a verbal work contract if the respective job is part-time. You can find out more about the existing employment contracts in China from our payroll experts. We recommend outsourcing payroll services in China from the beginning of your business for safety and fulfillment of all the conditions imposed on the labor market.
How are salaries paid in China?
Employers in China have the opportunity to establish the day of payment of salaries for the company‘s employees. Normally, salary payments can be made monthly, but payment is also made once every 15 days. Our payroll specialists in China can manage salary preparation and distribution with dedicated platforms. Payslips will be prepared with information about gross and net salary, taxes, deductions, and other relevant information. In addition, overtime is also considered, taking into account that in China, no more than 36 overtime hours are allowed per month. Last but not least, in China, most companies offer the 13th and 14th salaries, which are stipulated in the employment contract of each employee. You can find out more about payroll in China from our company as soon as you contact us and schedule a meeting with our specialists.
About the verbal employment contract – Chinese payroll process
When you contract the services of an accounting firm in China, you must know exactly what it is about. For example, you can benefit from the services offered by a payroll specialist in China, who can also provide you with information about the types of contracts that can be registered, as required by law. For example, only written contracts are accepted, not verbal ones at all. Therefore, a respectable employer on the market knows the legislation and, of course, must comply with it.
We mention that in the case of foreign employees in Chinese companies, a work and residence permit in China is needed, depending on the country they come from.
Feel free to contact us for extra details about payroll in China and the implicated procedures. We can also help you start a company in China.
The minimum wage in China
According to the latest data, the minimum wage in China per month is approximately CNY 2,320 in Beijing and around CNY 2,590 in Shanghai, because the salary might differ from city to city. However, it should be mentioned that minimum wages differ depending on the region. For example, in regions such as Beijing, Hebei, Jiangsu, and Shandong, the minimum wage is set at around CNY 1,960 per month. We can provide additional details about payroll in China, so get in touch with us as soon as possible.
Why use the services of a payroll specialist in China?
It is recommended to have at hand the services of a specialist in the Chinese payroll process, who knows the legislation and the dedicated platforms for calculating salaries in a company. On the other hand, outsourced payroll services in China are much more affordable compared to hiring such specialists for your company.
Therefore, you can discover the benefits and offers of an accounting firm in China if you contact us. We are aware of the changes made to the legislation and can propose various strategies to be implemented in the company to be able to continue in order from a legal point of view with the company and the activities.
Investors can solicit information about WOFE in China and the registration procedures involved. Are you interested in payroll services in China and want to collaborate with our specialists? You can contact us by phone or online to find out all the information about the Chinese payroll process that can be implemented for the company you own.
