With 1.4 billion people, the second-largest economy in the world, and a dynamic, innovative business sector, China is a desirable destination for many companies wishing to grow their operations.

Hiring staff in your target nation is a crucial part of any international expansion, and these staff members must be paid. However, setting up payroll in China may be an extremely difficult and expensive procedure because you have to adhere to the country’s labor and tax laws. You should conduct thorough research before beginning your expansion because failing to follow the correct processes could result in hefty fines and legal difficulties. 

Working with a China PEO & Employer of Record, like INS Global, is a great choice for many firms. We can assist you with setting up your China payroll outsourcing, serving as your official employer within China to streamline the procedure and do away with the requirement that you create a legal business there.

If you possess an entity

We can set up and manage your local China payroll outsourcing for businesses with a registered entity in China. We can also take care of the related HR, administration, and compliance tasks, saving you the time.

For larger companies and those determined to establish a lasting presence in China, this is a fantastic alternative.

If you are lacking an entity

We can use our China PEO & Employer of Record to serve as the employer of record for your hires if you haven’t yet registered an entity in China. Additionally, we can set up and oversee your China payroll outsourcing to guarantee complete adherence to regional rules.

This outsourcing solution is adaptable, low-risk, and scalable for any companies wishing to investigate the Chinese market.

What are China’s payroll tax and withholding regulations?

It is required by law for you to pay your China payroll taxes, so you must be aware of them and adhere to the regulations strictly. China uses a progressive taxation system, similar to the majority of other nations, where higher earners pay a higher percentage of their income than lower earners. The corporate tax rate is set at 25%, and these rates range from 3% to 45%.

Additionally, businesses are required by law to contribute to an employee housing fund, which typically accounts for up to 25% of salary and the sum is frequently negotiated by hiring.

Additionally, businesses are required to pay into five other benefits: health insurance, unemployment insurance, maternity insurance, pensions, and worker compensation.

Rights under contracts and rules regarding termination

Employment contracts for personnel in China must be set up before you start outsourcing payroll to China. These contracts must outline the rights and benefits that hirees are entitled to, such as maternity leave, paid time off, and sick time.

Employees who experience health issues at work are entitled to full sick pay for up to 12 months. Employees may be granted between a few months and two years of paid absence for unrelated illness. 

The terms of termination, which may vary depending on the type of employment, must also be spelled out in the contracts. Fixed-term contracts, for instance, do not require a set notice time, although other types of employment do, requiring a 30-day notice period for termination without good reason.

How to start payroll outsourcing China

Setting up your payroll in China requires a number of processes if you are growing into China.

To start with, you will require a Chinese legal company to serve as the employer of record. This might be your own local business or one of our worldwide PEO solutions.

Then, you’ll need to open a bank account in China and start paying your staff in Chinese Yuan. Beyond this, workers require thorough employment contracts that include important clauses and information like social insurance, set hours, and a description of working circumstances.

In order to maintain compliance with regional payroll and employment rules, you must regularly monitor your ongoing China payroll processing. Payroll processing, for instance, must take into account the fact that foreign workers in Shanghai are not yet compelled to contribute to the Chinese social security system. Foreigners are required to pay the full cost of Chinese social insurance in other Chinese cities. 

You can hire a global PEO to serve as your employer of record in China, or you can outsource the management of your local organization or subsidiary’s payroll in China to the global PEO.

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