China’s new Social Insurance tax: the UK impact

I recently retired as UK senior partner of BDO after 23 years as a partner with the firm. Last year, I took up a position as visiting professor at Xiamen University, China. My wife is Chinese and I decided to spend three months exploring business opportunities in the region and trying to learn some Mandarin.

I’m blogging about my experiences in China for Real Business – catch up on my journey so far.

A new tax will impact all UK firms doing business with expat employees in China. Social Insurance contributions will have to be made by both employer and employee (up to 37 per cent and 12 per cent of monthly income respectively). 

It came into force in mid-October but collection will be back-dated and there is still confusion about the mechanics, access to benefits and any tax credit available back in the UK. 

In theory, expats gain access to Chinese pension, healthcare and unemployment benefit; in practice, these are likely to be illusory or valueless. 

It seems that China has decided to raise fiscal revenues from a soft target – perhaps it is aiming to provide funds for a Chinese bail-out of the Euro?

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