Caught on our radar
Changes in tax law
to impact companies
operating in China
Our colleagues at the Ally Law member firm R&P China Lawyers, located in Shanghai and Beijing, highlight the legal developments resulting from reforms to the tax and social insurance systems in China. Changes that may affect foreign companies that operate in and have employees in China.
In June 2018, major amendments to the PRC Individual Income Tax Law (IIT Law) were adopted, to take effect in October 2018.
The reforms are some of the most important and comprehensive since the passing of the original IIT law in 1980, and will certainly impact the payroll/finance operations of every company in China. Key amendments are the introduction of tax deductible expenses for Chinese employees and a reduction for expatriates; and changes to the residency rules for foreigners.
One important aspect that the amendments do not touch, is that employers remain responsible for withholding IIT. So, the burden remains on the companies to get it right.
In conjunction with the changes to the tax legislation, reforms have been made to the social insurance system (to become effective on 1 January 2019), as the responsibility to collect social insurance premiums (i.e. for basic pension insurance, basic medical insurance, etc.) will be transferred from the local social insurance bureau to the local tax bureau.
The legal breifing from R&P China Lawyers can be downloaded using the link below.
Thanks to our collaboration with our colleagues within the Ally Law framework, we at Lindmark Welinder can open the doors for you and your business to new ventures abroad and to support you with business law expertise worldwide, for example in China.
R&P-Lawyers-September-2018-Briefing.pdf (1768 kb)