By Helen Kong
Editors: Qian Zhou & Alexander Chipman Koty
Software platforms are playing an increasingly important role in bridging the information gap between payroll processors and their clients. Those same platforms are now being harnessed to generate and store the various HR administration records that companies need to maintain. These systems are effectively reducing the risk that arises from incomplete or inaccurate HR documentation.
HR documentation in any country tends to be of a similar nature, and in China and the other main emerging economies of Asia, the core documents are the same. The offer letter and employee contract define, in different forms, the detail of the employment relationship between the two parties. The employee handbook further delineates the rules and regulations that the company expects the employee to follow. Additionally, the employee information form captures all the relevant details concerning each employee and ensures that those employees take responsibility for the truthfulness of the information they provide to the company. Other documents relating to positions within the organization, such as job descriptions, also need to be managed.
By Dezan Shira & Associates
Editor: Alexander Chipman Koty
With e-commerce exploding across China, businesses from around the world are flocking to enter the fray. According to a study by Accenture and AliResearch, China is expected to become the largest cross border B2C market in the world by 2020, with over 200 million shoppers purchasing US$245 billion worth of imported goods online. Accessing this tremendous market, however, presents a variety of challenges. One such challenge is choosing a third-party (TP), an agency that offers international companies with no physical presence in China access to Chinese e-commerce platforms, also known as a Tmall Partner or Trusted Partner.
To create a presence on Tmall Global, the cross border version of China’s largest B2C online marketplace, companies must be directly invited by Tmall or apply through the lobbying of a TP. As a result of this policy and the rapid proliferation of China’s e-commerce market, a myriad of TPs have emerged recently, aiming to capitalize on this lucrative business. These organizations offer an array of different services and expertise yet generally lack extensive track records. As such, selecting a TP is far from a straightforward affair. When expanding into China’s dynamic e-commerce market, choosing a trustworthy TP suited to a company’s industry and needs is essential to connect with discerning Chinese consumers and avoid squandering unnecessary resources.
Once China’s value-added tax (VAT) reform is fully implemented on May 1, consumption tax will become one of only two major indirect taxes in the country. Consumption tax is imposed on all the individuals and organizations which manufacture and import taxable products, process taxable products under consignment, or sell taxable products. In 2015, China’s consumption tax revenue amounted to RMB 890.7 billion.
The current system of consumption tax in China was implemented in 1994 via the Interim Regulations on Consumption Tax, passed by the State Council in 1993, and further amended in 2008. The Implementation Guidelines were promulgated in 2008 by the MOF and SAT. Consumption tax forms part of the base upon which VAT is levied. In this article, we provide a brief introduction to China’s consumption tax system and illustrate the tax calculation process with two examples.
By Dezan Shira & Associates
Editor: Samuel Wrest
The fallout from China’s abolishment of its one-child policy has taken new and unexpected turns in recent weeks. Following protests from parents affected by the 36 year old policy – most by having a single disabled or severely ill child unable to support them in their old age – the government stated that it would increase the monthly subsidy for families whose only child is disabled. The announcement has been widely reported in Western media and has helped reenergize discussion of the role that the disabled have in Chinese society, particularly in the workforce.
When China hosted the Paralympic games in 2008, then president Hu Jintao promised that the country would strive to make its disabled citizens “equal members of society”, a statement that presaged a string of national and provincial policies aimed squarely at incentivizing businesses to hire disabled workers. Awareness of these incentives among foreign companies, however, has remained generally low since their implementation, and many domestic companies choose not to use them – two factors in many that have seen a low employment rate for China’s disabled citizens.
Maternity Insurance to be Combined with Basic Medical Insurance
On April 19, the Ministry of Human Resources & Social Security (MOHRSS) issued the “Notice on Reducing the Social Security Insurance Premium Rate in Stages.” The Notice stipulates that once relevant provisions are released and enacted, maternity insurance will be combined with basic medical insurance. In addition, starting May 1, the unemployment insurance premium rate may be reduced to one to 1.5 percent, and the individual payment rate will not exceed 0.5 percent. This reduction is planned to be made over a two-month period. Detailed schemes will be determined by each province or region individually.
By Allan Xu Manager, Business Advisory Services
As part of our mission to provide business intelligence on the legal, tax, and operational issues of doing business in China, China Briefing
presents a series of case studies based on the practical experience of professionals at Dezan Shira & Associates
A pharmaceutical company establishing operations in China was approached by an employee with a request regarding social insurance payments. Mr. B joined the company in August 2011 as a salesman. Before inking the labor contract, the company and Mr. B signed a letter of commitments including the following:
- Mr. B voluntarily requests the employer to not pay social insurance premiums during his employment, and agrees to accept the allowance from the company directly;
- Mr. B agrees to not terminate the labor relationship or claim severance due to the company’s nonpayment of his social insurance premiums;
- Mr. B signs the letter of commitments of his own free will and it will become effective on the date of signing by both parties.
By Kerry Brown and He Jingjing
One of the challenges of trying to make sense of the ‘One Belt, One Road’ strategy (OBOR, in Chinese `yi dai yi lu’一带一路) has been to work out what the idea is trying to express in the first place, at least as it is understood within China. In March 2015, the State Council issued an action plan, in which it stated that the idea was principally aimed at encouraging:
The orderly and free flow of economic factors, highly efficient allocation of resources and deep integration of markets; encouraging the countries along the Belt and Road to achieve economic policy coordination and carry out broader and more in-depth regional cooperation of higher standards; and jointly creating an open, inclusive and balanced regional economic cooperation architecture that benefits all.
The latest issue of China Briefing Magazine, titled “How IT is Changing Payroll Processing and HR Admin in China“, is out now and available to subscribers as a complimentary download in the Asia Briefing Bookstore through the month of April.
- Leveraging IT to Facilitate Efficient Payroll Processing
- Understanding IT’s Increasing Role in HR Administration Work in China
- Outsourcing Payroll and HR Management