Shanghai Municipal bureau of HR and Social Security announces new salary limits for social insurance effective July 1, 2023
The Shanghai Municipal Bureau of Human Resources and Social Security (“the Bureau”) has announced that the average salary of employed persons in 2022 is RMB 12,183 per month. The Bureau also announced adjustments to the upper and lower limit of Shanghai’s social security base. Accordingly, effective from July 1, 2023, the upper base is adjusted to RMB 36,549 per month, and the lower limit is adjusted to RMB 7,310 per month. Thus, commencing from July 1, 2023, monthly social security contribution for a Shanghai based employee having salary above the specified limits, will increase by RMB 1,211.19, of which increase in employer’s share is RMB 798.02 and the increase in employee’s share is RMB 413.18
New social insurance and housing fund payment table is as below (commencing from July 1 2023)
| SOCIAL INSURANCE & HOUSING FUND APPLICABLE IN SHANGHAI (July 1 2023 to June 30 2024 applicable) | ||||||||
| No | Item | Capped PAYMENT BASE | CONTRIBUTION | Total expense | Remarks | |||
| EMPLOYER | EMPLOYEE | |||||||
| Rate | Contribution | Rate | Contribution | ER +EE | ||||
| 1 | Pension | 36,549.00 | 16.0% | 5,847.84 | 8.0% | 2,923.92 | 8,771.76 | The benchmark for the social insurance is to be adjusted each June according to the employee’s average salary of the last year but capped on three times of city average salary. |
| 2 | Unemployment | 36,549.00 | 0.5% | 182.75 | 0.5% | 182.75 | 365.49 | |
| 3 | Work-related Injury | 36,549.00 | 0.30% | 109.65 | 0.0% | 0.00 | 109.65 | |
| 4 | Basic Medical | 36,549.00 | 9.0% | 3,289.41 | 2.0% | 730.98 | 4,020.39 | |
| 5 | Maternity | 36,549.00 | 1.0% | 365.49 | 0.0% | 0.00 | 365.49 | |
| 6 | Housing Fund | 36,549.00 | 7.0% | 2,558.43 | 7.0% | 2,558.43 | 5,116.86 | |
| Subtotal | 33.8% | 12,353.56 | 17.50% | 6,396.08 | 18749.64 | |||
This will affect our client GMAC so we’ll share this update with GMAC accordingly
The Beijing government hasn’t yet issued the new benchmark salary for determining social contributions and we expect to receive the update in the middle of July 2023.
Tax benefits for lump sum compensation pn termination of employment contracts
On June 19, 2023, Beijing Municipal Bureau of Statistics declared that the average annual salary of employees of legal entities in Beijing in 2022 is RMB 178,476. According to the regulations No. 164 of 2018 the State Administration of Taxation &the Ministry of Finance, one-time compensation obtained on the termination of the employment relationship is exempt from individual income tax up to an amount calculated at 3 times the average salary of employees in the local legal entities. Any compensation beyond this limit will be subject to IIT. Therefore, after June 2023, the maximum IIT exemption for compensation of termination of employment in Beijing is RMB 535,428.
HR tips: Can the IIT exemption policy apply to the economic compensation incurred by termination of employment contract when it is expiry (not renewed)? The answer is: no.
Important updates regarding China’s Immigration Policies
The following are important updates with respect to immigration policy:
∙ Foreign employees with doctoral degree can now apply for the China Permanent Residence Permits (commonly known as China green card). This was newly announced by Shanghai Exit-entry Management Bureau. Previously, this policy was only available to Chinese with foreign nationals.
∙ A Short-term Personal Affairs Visa (S2, with “Internship”) at the Immigration Department is now open for foreign students who come to Beijing for internship.
∙ Embassy of the People’s Republic of China in the United States made announcement on the compensation Arrangements for the Use-Suspension of 10-year Multi-Entry Visa due to the COVID-19 –
Since March 15, 2023, Chinese Government has made further adjustments to the visa and entry policies, whereby valid visas issued before March 28, 2020 have been reinstated. Recently, some applicants asked whether the Chinese Embassy and Consulates-General in the United States can compensate for use-suspension of 10-year multi-entry visas in past three years (March 28, 2020 to March 14, 2023) due to the COVID-19. The specific arrangements announced are as follows:
1. If a new multi-year multi-entry visa or residence permit has been issued after March 28, 2020, no compensation will be given for the original multi-year multi-entry visa.
2. Applicants may choose whether to apply for compensation after the expiration of their visas. A three-year multi-entry visa can be applied free of charge in compensation. If applicants choose to give up the compensation, a new 10-year multi-entry visa can be applied for with normal charge.