Human Capital Services
Why China payroll is its own discipline
China payroll combines three regimes — individual income tax (IIT), statutory social insurance and the housing fund — that are administered independently, recalibrated frequently and administered at the municipal level. The combined employer cost typically adds 35–45% on top of gross cash compensation, before considering the equity and long-term-incentive programmes that are now standard for senior and key talent. For expatriates the picture is further complicated by the 2019 IIT reform, the implementation of the social-insurance contribution base harmonisation, and the SAFE registration regime for cross-border compensation flows.
Our services
IIT planning and compliance
We prepare and review monthly IIT calculations, withholding filings and the annual综合所得 settlement for each employee, and we design cash-compensation structures that minimise after-tax cost while remaining defensible under the STA's substance requirements. For senior executives moving on or off a Chinese assignment we model the one-off and recurring IIT exposure and the structuring options (bonus deferral, long-term incentive vesting, secondment arrangements).
Equity and long-term incentives
We advise on the design, holding and vesting of employee equity schemes — including Restricted Stock Units, Performance Share Units, Employee Stock Ownership Plans (ESOP) and the domestic equivalent 员工持股计划 — and on the exchange-control, tax and SAFE registration steps required to operate them in China. Where a global scheme is being rolled out, we coordinate with the client's overseas counsel to align the China leg with the master plan.
Expatriate tax
For inbound assignees we handle the tax-equalisation policy review, the 183-day residency analysis, the preparation of IIT filings, and the exit-tax planning ahead of repatriation. For outbound assignees from Chinese entities, we advise on the China-side tax on the onshore leg of the package, the SAFE approval for offshore compensation, and the host-jurisdiction considerations where relevant.
Social insurance and housing fund
We review the contribution base against the local benchmark, benchmark the employer cost against sector practice, and assist with the rectification of underpayments identified in the authorities' recent compliance campaigns. Where staff are seconded or on intra-group transfers we advise on which entity carries the contribution liability.
Immigration
We work alongside the client's immigration counsel on work-permit and residence-permit applications, renewals and family dependants, and on the documentation required for Z-visa conversion. The objective is a single accountable process so that moves in and out of China do not slip the tax or immigration calendar.