Cough it Up: A category_ide to China’s New Foreigner Social Security Tax
This summer China passed a new law, which technically went into effect on October 15, requiring foreign workers and their employers to contribute to a social security fund. To help foreigners living in China better understand what the new social security tax means, China Real Time has compiled a list of facts that the Ministry of Human Resources and Social Security has revealed thus far:
1. Pricing
Every city will have its own pricing scheme, requiring companies to pay a percentage of an employee’s salary to the social security fund. The individual contribution will hover around 10% of the employee’s salary. The Ministry of Human Resources and Social Security recommends that every individual check with a local bureau to determine rates.
For Beijing, companies will contribute the following percentage based on an employee’s salary per month, with a salary cap of 12,603 yuan ($1,981):
2. Start Date
The law will be implemented by year-end and money will be collected according to an Oct. 15 start date, requiring retroactive payments.
3. Medical Insurance
The Ministry of Human Resources and Social Security says the medical insurance plan will allow foreigners to choose which hospitals they’d like to go to. An unspecified percentage of expenses will be reimbursed using the funds from the account.
Officials have not yet specified whether insurance will cover a foreigner beyond China’s borders. Upon leaving China, foreigners will be able to collect the unused portion of the individual contribution to the medical insurance fund. Corporate contributions cannot be collected.
4. Maternity Insurance
The Ministry has not yet specified if maternity insurance will cover multiple births
5. Unemployment
The Ministry said it is working with employment and visa agencies to devise a plan that will allow unemployed foreigners to collect.
6. Pension
Pensions can be collected if the foreigner has contributed for 15 years. They will be paid until death. The Ministry has not specified a retirement age for foreigners or how foreigners will collect the fund. Upon leaving China, foreigners will be able to collect the individual contribution to the retirement fund. Corporate contributions cannot be collected.
7. Contract Workers
Contract workers and workers who would be forced to pay on behalf of the company and themselves can visit the local bureau of the social security office to have their cases reviewed. The Ministry will reconfigure payments for individuals.