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[old34]

Here's the most detailed report I've seen to date on the impact of China's decision to include foreigners in their social insurance system. Though the article is quite detailed, by its own admission, there are still a number of open issues. Still it fills in some details that have only been speculated about both here at the Saloon and elsewhere.

http://www.dezshira.com/updates/2011/09/foreigner-participation-in-chinas-social-insurance-system-now-mandatory.html/

[zero]

I have several, contradictory ideas about this new program:

-Maybe it will blow over without ever being put into effect.

-Maybe employer will figure out loopholes, to the same effect as point above.

-Maybe this is the government's way of reducing the number of foreigners working in the country.

-Maybe it's a good thing, if it puts foreign workers into a class more similar to local workers. Maybe it signals that foreigners will slowly become more integrated into society.

[MK]

I haven't read up on this because I've been on holiday, but now I am back and wow...seems my school could potentially be paying another 37% tax on top of my salary and I am gonna be losing something like 10% more of my wages as tax as well?

My school haven't issued a word about this and I can't believe there isn't more discussion about it in general...is this going to be one of those things that just kind of disappears into a mire of loopholes an bureaucracy or is it for real?

This is a lot of money we are talking about...

Just had another thought, how can we possibly have both this and supposed 'rules' about no more than five years continuous employment, no visas for over 65s etc....we're to be a normalised part of the labour force but can find ourselves out on our ear (and out of the country) on a whim...I know these rules are not really laws but they are enforced arbitrarily as we have seen.

[MK]

An article on this in the UK press today:

http://www.telegraph.co.uk/finance/personalfinance/offshorefinance/8766291/China-to-introduce-expat-social-insurance-tax.html

[Nolefan]

MK, you've hit the nail on the head.
That extra 37% employers have to pay is gonna make hiring foreigners a lot costlier... we're talking 3K on a salary of 8K so now the company is on the hook for 11k and the smaller ones will not take this lightly.

They will have to change a few things to balance it out and I don't see them not implementing it.. they're gonna create a mess and fix it gradually.

[jpd01]

Actually I'm not so sure it will be followed through. I think it's pretty common for private schools to be pretty dodgy about paying a wage let alone paying the correct amount of tax.
Some schools will pay in cash and others will pay you only with a bank card that they have opened which is not in your name etc The list is pretty long for the ways in which schools will go out of their way to not pay you above board.
I remember a colleague at one of my part time jobs asked for tax receipts from the accounting department and they all went into a spin about how is was impossible for them to provide them. After much insistence he got them and the numbers were very dodgy.
Frankly I think it's just a face device but then again if there is tax revenue to be made by the government then it might actually be enforced, but then again I don't think it either will be or will take a long time to actually come in like and new law here. Plus there is always the interesting phenomenon of laws being completely ignored province to province or not even acknowledged.   

[jpd01]

Actually, when I think about it it's probably just another step in trying to get multinational companies to hire young Chinese graduates over bringing in expats from back home. The GOV has been putting in these kinds of steps over the last couple of years pretty aggressively.

[MK]

Somebody actually posted something relevant about this over at the Spoon:

Beijing may delay new tax on expats

However, the article as posted is not exactly reassuring, in fact it's even more confusing.

[El Macho]

Good article with good news considering what things are like here. Our FAO claimed to not have heard anything about this prior to me sending him an article about it…after investigation, he claimed that the insurance scheme would be for employees on 12 month contracts. The FAO and the foreign language department are planning meetings to figure out what, exactly, to do about all this.

[The Local Dialect]

I agree they need to give employers more time to figure out how they're going to handle this.

In theory I don't have a problem with social security for foreigners. I think normalizing our positions here and treating us like actual workers rather than acting like we're all just on some sort of working holiday. I've been here for close to 10 years and social security is a big concern for me since I haven't been paying into my own country's system.

Ideally I think I would like to see these benefits only take effect after so many years in China, or for there to be exemptions for people earning less than X amount. But I'd have to think about it some more. I don't think  the people who are here for a year or two and then move on really need to be paying into social security, especially considering the salaries those people are usually on.

[opiate]

For FT's this is a nightmare. There is no upside for FT's. Social Security sounds peachy in theory but good luck collecting it when the time comes. China + rules that change with the wind + human greed =   when you want to make a claim. I'd bet my left nut that you'd be required to provide all sorts of forms from schools and I think most of us know how difficult that is for forms that don't even put the employer on the hook for cash or require China to make a payout. This is a money grab on all foreigners and their employers, nothing more. Promise you we'll feel it more than our employers.

As has been said before, expect schools to find ways around this. The public school and Uni teachers will perhaps actually have to eat this if it goes into effect though. Expect salaries dropping to compensate. Those at mills will likely be told their salaries have to be lowered due to the tax while the company never pays it and laughs all the way to the bank at our expense.

Personally, I think if this is ever enforced, we'll be seeing a boatload more illegal FT's on F and L visas. We are replaceable and a dime a dozen.....cash is king.

[Escaped Lunatic]

I'm still waiting to hear back from my company accountant.

[old34]

Here may be the best and latest news, I don't know because I haven't read it yet. But it comes via Dezan Shira which IMO usually has the the most in depth and knowledgeable info on business subjects including taxes. Because that is their business.

They have devoted their current monthly issue of China Briefing to the new Social Insurance Law. There are 5 articles about it and even they admit a lot is still not clear. But they try to tackle it anyway, which is a lot better than relying on hearsay, uneducated opinions and course speculation on various FT boards around the Internet.

The link to the current issue is:
http://www.china-briefing.com/news/2011/10/03/new-issue-of-china-briefing-the-social-insurance-law-for-foreign-investors.html?utm_campaign=20111013_ab&utm_medium=email&utm_source=asia_briefing_mail_list&utm_content=top_1

Often, they will provide free access to articles, but in this case, because it's 5 articles, they're charging $10 to download it. BUT...it's all free in their FREE monthly magazine which you can often find in the better hotels which cater to foreigners in 1st and 2nd tier cities, and some of the bars and fancier restaurants there, too.

Go to the page, memorize the cover, and go hunt down the FREE issue in your local expat hangout.

Here's the cover, which could have been of me if the bald spot was (quite) a bit larger:

[El Macho]

Thanks for the heads-up…If anyone knows where to pick this up in Beijing, please let me know.

[old34]

The latest on this issue: An interesting article on the topic of the rollout of the new social security scheme-supposedly a news briefing by the deputy head of the Ministry of Human Resources' National Social Security Management Center. The current situation is neatly summarized in this quote from the guy:

"We cannot at the moment address all questions once and for all ... Some new problems have come up and we are working hard to address them and we need some time to do so, rather than answering yes or no to any question at the moment."

http://www.asiaone.com/News/Latest%2BNews/Asia/Story/A1Story20111028-307415.html