Jul. 11 – According to figures released by Shenzhen’s municipal statistics department, the average annual wage of an employee at work in Shenzhen in 2011 was RMB55,143 (i.e., RMB4,595 average monthly salary). For the period from July 1, 2012 to June 30, 2013, the unified standard of RMB4,595 per month (hereinafter referred to as “2011 average monthly salary figure”) will be used in the computation of Shenzhen’s social insurance contribution base.
Accordingly, Shenzhen’s Housing Fund Management Center released a supplementary notice adjusting the 2012 housing fund contribution base (shen gong ji jin  No.60) on June 26. The maximum housing fund contribution base has been adjusted to five times the 2011 average monthly salary figure, i.e. RMB4,595 x 5 = RMB22,976.
The local tax bureau of Shenzhen followed up with a supplementary notice (shen di shui fa  No.193) clarifying the maximum amount of housing fund deductible from the taxable income of an individual. Specifically, entities and individuals can deduct an amount not exceeding 12 percent of the employee’s average monthly salary of the previous year from their individual taxable income. This average monthly salary figure should not exceed three times the 2011 average monthly salary figure, i.e. RMB4,595 x 3 = RMB13,785.
Housing fund contributions by enterprises and individuals in excess of the above-mentioned percentage and standard should be included in the salary and remuneration incomes of individuals in the current period for the purpose of individual income tax calculation.
On a related note, to relieve the burden of enterprises, the Shenzhen Municipal Labor and Social Security Bureau issued a circular lowering the benchmark contribution rates for work-related injury insurance on June 12. According to the circular, from July 1, 2012 onwards, the benchmark contribution rates for work-related injury insurance will be lowered by 20 percent across the board.
This means that the benchmark rates for work-related injury insurance for low-risk, medium-risk and high-risk enterprises will be reduced from 0.5 percent, 1.0 percent and 1.5 percent to a respective 0.4 percent, 0.8 percent and 1.2 percent. The new rates will also be reduced proportionally for the second and third categories of enterprises that have already adopted floating premium rates for work-related injury insurance.
*Update (July 12, 2012): In accordance with figures released by the municipal statistical department, Guangzhou’s Housing Fund Management Center issued on July 10, 2012 a notice adjusting the maximum housing fund contribution base for 2012 to RMB23,945 (i.e. RMB4,789 x 5).
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia.
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Shenzhen City Guide
Asia Briefing’s Shenzhen City Guide is designed for the investor seeking a general overview on China’s steadily growing tech city and important gateway to Hong Kong. Starting as China’s first – and eventually most successful – special economic zone, Shenzhen has seen vast sums of investment pour into the country both from abroad and from within China since the late 1970s.