Seconding Expatriates to China
Legal, Visa and Tax Issues
Presented by Kristina Koehler-Coluccia
Director, Koehler Group
Koehler Group Webinar Series
May 2015
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Incorporation, Tax, Accounting & Trade Services throughout Hong Kong, Singapore & China
www.koehlerservices.com
2
Q&A
Incorporation, Tax, Accounting & Trade Services throughout Hong Kong, Singapore & China
www.koehlerservices.com
About Us
Koehler Group (formerly known as Klako Group) is an international accounting and management consulting firm
established in 1979. 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:
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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.
Incorporation, Tax, Accounting & Trade Services throughout Hong Kong, Singapore & China
www.koehlerservices.com
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.
Incorporation, Tax, Accounting & Trade Services throughout Hong Kong, Singapore & China
www.koehlerservices.com
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
Incorporation, Tax, Accounting & Trade Services throughout Hong Kong, Singapore & China
www.koehlerservices.com
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
Incorporation, Tax, Accounting & Trade Services throughout Hong Kong, Singapore & China
www.koehlerservices.com
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
Incorporation, Tax, Accounting & Trade Services throughout Hong Kong, Singapore & China
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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
Incorporation, Tax, Accounting & Trade Services throughout Hong Kong, Singapore & China
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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
Incorporation, Tax, Accounting & Trade Services throughout Hong Kong, Singapore & China
www.koehlerservices.com
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
Incorporation, Tax, Accounting & Trade Services throughout Hong Kong, Singapore & China
www.koehlerservices.com
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
Incorporation, Tax, Accounting & Trade Services throughout Hong Kong, Singapore & China
www.koehlerservices.com
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)
• Income sourced within China
• Income paid by an overseas employer (not
borne by its Chinese operation) is exempt
Living in China more than 90 days
(< 183 days if there is a tax treaty in place)
• 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 6th year onwards for every full year
spent in China
Incorporation, Tax, Accounting & Trade Services throughout Hong Kong, Singapore & China
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Individual Income Tax in China
Deductions in terms of Allowances
Taxable
Not 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
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
Incorporation, Tax, Accounting & Trade Services throughout Hong Kong, Singapore & China
www.koehlerservices.com
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
Quick Calculation
Deduction (in RMB)
Less than 1,500
3%
0
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
Incorporation, Tax, Accounting & Trade Services throughout Hong Kong, Singapore & China
www.koehlerservices.com
Our Team
Our founder, Mr. Klaus Koehler, has lived in Hong Kong since 1970. After many years of international trading activities with Hong
Kong and China, he established Koehler Group Holdings and its associated entities in 1979. 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
Mr. Sven Koehler
Group Managing Director & Director - Hong Kong & Singapore
16/F Rykadan Capital Tower
135 Hoi Bun Road, Kwun Tong
Kowloon, Hong Kong
Tel: +852 2345 7555
Fax: +852 2357 5452
China Headquarters - Shanghai
Ms. Kristina Koehler
Director - China
4/F Cross Tower
318 Fuzhou Road,
Shanghai, 200001, China
Tel: +86 21 6391 3188
Fax: +86 21 6391 2032
Email: [email protected]
Email: [email protected]
Incorporation, Tax, Accounting & Trade Services throughout Hong Kong, Singapore & China
www.koehlerservices.com
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