Seconding Expatriates to China Legal, Visa and Tax Issues

Transcription

1 Seconding Expatriates to China Legal, Visa and Tax Issues Presented by Kristina Koehler-Coluccia Director, Koehler Group Koehler Group Webinar Series May 2015

2 Can you hear me? The presentation will be distributed to all participants after the webinar. 2

3 Q&A

4 About Us Koehler Group (formerly known as Klako Group) is an international accounting and management consulting firm established in Koehler Group provides a wide range of market entry consulting, incorporation, tax, accounting and human resource services to organizations interested in entering and expanding throughout Hong Kong, Singapore and China. Koehler Group is managed by an international and local team of over 120 consultants, accountants and legal professionals who work in our ten offices in Hong Kong, Singapore and China. From our offices in Beijing, Chengdu, Dalian, Guangzhou, Hangzhou, Hong Kong, Shanghai, Shenzhen, Singapore and Tianjin, we offer the following services: Incorporations Domiciliation & Management Legal Compliance & Administration Accounting & Payroll Tax Compliance Trade & Supply Chain Solutions Recruitment & HR Services Trust & Fiduciary Services Our typical clients are small-to-medium sized privately owned companies as well multinational corporations. We recognize that each customer has individual requirements and our objective is to provide an efficient and cost effective service tailored to their specific needs. Our goal is to develop a lasting partnership with our customers with a focus on protecting their investments and maximizing their returns from their activities throughout China and Hong Kong. Our International Desks speak English, German, Spanish, French, Italian, Portuguese, Russian and Japanese.

5 About Your Speaker Kristina Koehler-Coluccia Director at Koehler Group Kristina has worked in the Chinese legal and accounting industry since 2003 when she joined Koehler Group as its China Director. Fluent in English, German, French and Mandarin, Kristina advises and represents Western clients (mainly European, North & South American and Australian) with their business interests in China. She has worked on numerous complex transactions including foreign direct investment including corporate (re)structuring and company liquidations, M&A deals and frequently advises on and represents foreign clients in tax, accounting and trade related matters. Kristina is co-author of Koehler Group s monthly magazine, ChinaInvest.biz which provides insight into investment, tax and operational issues for foreign companies entering and expanding throughout China. Kristina has also contributed to numerous other publications all relating to the Chinese legal, accounting and business practices and in addition frequently holds seminars, presentations and webinars at business groups and government institutions around the world.

6 Why do secondments exist in China? 1. Providing staff for short or long term projects 2. Establishing Local operations 3. Supervision of Local Operations 4. Building Relationships with Local Partners 5. Temporary Arrangements for Short-term absences and partner firms 6. Beneficial Cross-Border Experiences for Foreign Employees

7 Legal Implications for secondments to China 1. Invitation by the Local Legal Entity 2. Employment Contract with a Local Legal Entity 3. Work Permit & Residence Visa 4. Salaries and Social Insurance paid in Local Currency 5. Individual Income Tax paid to Local Tax Authorities 6. Individual Income Tax paid to Home Jurisdiction Tax Authorities

8 Key Employment Law Compliance Issues 1. Working Hours 2. Rest Days 3. Overtime and Overtime Payment 4. Annual Leave 5. Minimum Wage Requirement 6. Maternity Benefits 7. Retirement

9 Employment Contracts in China 1. Written Contract 2. Indirect Employment 3. Mandatory Provisions in Employment Contracts 4. De Facto Employment 5. Consequences for Failure to Conclude a Written Contract

10 Termination of Employees 1. Not at-will Termination 2. Termination Grounds 3. Special Categories of Protected Employees 4. Wrongful Termination 5. Statutory Severance 6. Automatic Ending of Employment Contract 7. Employee Resignation 8. Resolution of Employment Disputes

11 Social Insurance 1. Mandatory Participation in the Social Insurance Scheme 2. The Five Social Insurance Funds 1. Old Age Pension Insurance 2. Basic Medical Insurance 3. Occupational Accident Insurance 4. Unemployment Insurance 5. Maternity Insurance 6. Housing Funds 3. Mandatory Participating of Foreigners in the Social Insurance Scheme 4. Disadvantages of the Scheme for Foreigners

12 Immigration 1. Work Visas for Foreign Nationals 1. Special Talent Visa 2. Short-Term Visas (new regulations as of January 2015) 3. Work Permits and Residence Visas 2. Extension of Stay in China 3. Chinese Laws Apply to Foreign Nationals 4. Penalties for Breaking the Law

13 Individual Income Tax in China Am I subject to pay Chinese Tax? Taxpayer Status Taxable Income Living in China less than 90 days (< 183 days if there is a tax treaty in place) Living in China more than 90 days (< 183 days if there is a tax treaty in place) Income sourced within China Income paid by an overseas employer (not borne by its Chinese operation) is exempt Income sourced within China Income sources outside of China is not subject to tax, unless the tax payer is a director or senior manager of a Chinese domestic Company Living in China between 1-5 years Income sources within China Income sourced outside of China where the income is paid by a Chinese Company or individual Living in China more than 5 years Income sourced within and outside China from the 6 th year onwards for every full year spent in China

14 Individual Income Tax in China Deductions in terms of Allowances Taxable Basic Salary & Bonuses Foreign service allowance Hardship allowance Fixed housing allowances without regard to actual housing expenses Fixed Laundry and other personal expenses Tax reimbursement Meal allowances fixed per diem or monthly cash subsidies Not Taxable Reasonable paid educational expenses for dependents or his language training fee Reasonable paid home leave (twice in one year) Relocation / moving cost (one-time payment) Reasonable housing allowances paid on actual expenses basis or housing provided free of charge to employee Laundry expenses in non-cash form or reimbursement basis Local transportation paid on actual expenses basis or provided in kind free of charge to employee Meal allowances as reimbursement by the employer against actual meal receipts provided by the employee Obtaining the dividend or bonus dividend from FIE. Reimbursed business trip expenses

15 Individual Income Tax in China How much do I pay? Monthly Taxable Income = Monthly Gross Income RMB 4,800 Allowances Tax Payable = Monthly Taxable Income * Applicable Tax Rate Quick Calculation Deductions Monthly Taxable Income (in RMB) Tax Rate Less than 1,500 3% 0 Quick Calculation Deduction (in RMB) 1,500 4,500 10% 105 2,500 9,000 20% 555 9,000 35,000 25% 1,005 35,000 55,000 30% 2,755 55,000 80,000 35% 5,505 Over 80,000 45% 13,505

16 Our Team Our founder, Mr. Klaus Koehler, has lived in Hong Kong since After many years of international trading activities with Hong Kong and China, he established Koehler Group Holdings and its associated entities in Since then, Mr. Koehler has built up an experienced international team of accountants, legal and professional consultants (European, American, Chinese). The members of our team are multilingual and combine many years of expertise in accounting, tax, manufacturing, international trade, consulting, recruitment, etc. Our cultural and professional diversity gives us the flexibility and knowledge required to understand our clients' needs and offer integrated service packages. Sharing our understanding and knowledge of both the West and China is one of our major principles for success. Main Contacts: Group Headquarters - Hong Kong China Headquarters - Shanghai Mr. Sven Koehler Ms. Kristina Koehler Group Managing Director & Director - Hong Kong & Singapore Director - China 16/F Rykadan Capital Tower 4/F Cross Tower 135 Hoi Bun Road, Kwun Tong 318 Fuzhou Road, Kowloon, Hong Kong Shanghai, , China Tel: Tel: Fax: Fax: info@koehlerservices.com info@koehlerservices.com

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