China offers many opportunities for companies looking to expand or grow their business overseas. With the 2nd largest economy in the world and over 1.3 billion people, there are challenges to expanding your business and managing payroll in China. There are frequent changes to rules and regulations taking place at the provincial level, more than 11 languages spoken with many regional dialects, and many cultural differences and expectations in business transactions. There are complex business structures and a controlled currency.

Payroll and Tax Considerations

  • There is no national minimum wage in China. Each autonomous region sets minimum wage rates for its territory
  • Employers are required to pay overtime
  • Severance pay is based on the number of years an employee has worked for the employer. One month’s wage for every year of service
  • China has a progressive tax ranging from 3-45% of gross income
  • Employees must submit the following information by March 31st each year if they meet the following criteria:
    • Annual income exceeds RMB 120,000
    • Earn income from two or more difference sources in China
    • Earn income that is derived from sources outside of China
    • Receive taxable income for which there is no withholding agent
    • Meet any other conditions that are specified by the State Council

HR and Statutory Requirements

  • Employees are entitled to paid annual leave after working continuously for 12 months
  • The duration of paid leave depends on length of service and ranges from 5-15 days
  • Employees who suffer a work-related sickness or injury receive up to 12 months sick leave with full pay
  • Employees receive from 3-24 months for non-work related illness, depending on length of service. Employers sick pay obligations¬† vary locally
  • Female employees are entitled to a minimum of 98 days of paid maternity leave, including 15 days of leave before childbirth
  • Paternity leave is provided and varies by the local provinces, usually from 7-30 days. China does not recognize same-sex marriages or civil unions so paternity benefits are for heterosexual couples only
  • All employees are entitled to the basic old-age insurance contributed to by both the employer and the employee. The employer contributions to social insurance in China vary by province

Holidays in China

  • January 1 – New Year’s Day
  • January 31 – Spring Festival Eve
  • February 1 – Chinese New Year
  • February 2 – Spring Festival Golden Week Holiday
  • February 3 – Spring Festival Golden Week Holiday
  • February 4 – Spring Festival Golden Week Holiday
  • February 5 – Spring Festival Golden Week Holiday
  • February 6 – Spring Festival Golden Week Holiday
  • March 8 – International Women’s Day
  • April 5 – Qing Ming Jie
  • May 1 – Labor Day
  • May 4 – Youth Day
  • June 3 – Dragon Boat Festival
  • September 10 – Mid-Autumn Festival
  • October 1 – National Day
  • October 2 – National Day Golden Week Holiday
  • October 3 – National Day Golden Week Holiday
  • October 4 – National Day Golden Week Holiday
  • October 5 – National Day Golden Week Holiday
  • October 6 – National Day Golden Week Holiday
  • October 7 – National Day Golden Week Holiday

If you are just getting started in China, or need to get control of payroll and compliance, we can help. Blue Marble has created a cloud-based payroll platform with customized reporting gives you real-time access to your payroll across all countries and currencies. Our dedicated US-based service team and in-country experts in China are here to help when questions come up. Click here to learn more and ensure compliance for your payroll in China.