Avoiding double payments

In recent years, China signed and ratified social security agreements with a number of countries. The latest to take effect is the social security agreement between China and Japan. It was signed on May 9th, 2018 and took effect on September 1st, 2019.

Agreement with Japan took effect on September 1st

On August 27th, 2019, the Chinese Ministry of Human Resources and Social Security published a circular (Renshetingfa [2019] No. 81) on implementing the China-Japan social security agreement (“the Agreement”).

According to the Agreement, payments for otherwise compulsory pension insurance can be exempted if the employee can provide a Certificate of Coverage (“CoC”) issued by one country to the social insurance center of the other country. The dispatched employees may apply for the exemption from social insurance contributions for a maximum period of five years when applying for the first time. If the dispatching period exceeds five years, such period can be extended for up to one additional year with the consent of competent authorities or agencies of both contracting parties.

The aim of social security agreement is to avoid double payment of social security contributions in both countries and alleviate the burden of the enterprises and employees. It will benefit employees dispatched to China from Japan and vice versa, but also diplomatic and consular staff as well as civil servants on assignments between Japan and China.

In China, applications for exemptions under any bilateral social security agreement can be made online on the website of the National Social Insurance Service Platform.

China’s Social Security Agreements with other countries

Up until now, China has signed the social security agreements with twelve countries, ten of which have taken effect so far. It is worth noting that the scope of the agreements differs. While for some countries it covers both pension and unemployment insurance, other agreements only govern pension insurance. The following table lists the countries China has concluded social security agreements with and the exempted social insurance for your easy reference.

Source: Ecovis Beijing research and Beijing Social Security Center

Additionally, China is currently negotiating bilateral social security agreements with a number of other countries, while even more countries have expressed their intention to negotiate such an agreement. Both are listed in the table below.

Source: Renshe Jianzi [2018] No. 98

*The social security legislation in Quebec differs from the legislation in the other provinces of Canada, Quebec has therefore negotiated and/or signed bilateral social security agreements on its own with more than thirty countries.

Please contact our expert for more information on social security regulation in China.

 

Iris Wang – Tax Manager

Iris has more than nine years of experience in tax compliance and consulting services. Her field of expertise is tax planning and optimization for expatriates, payroll and individual income tax consulting and structuring services. Before joining ECOVIS Beijing, she worked in Big Four companies where she advised many international clients.

Contact: iris.wang@ecovis-beijing.com


About ECOVIS Beijing

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