Do Foreigners in China Make Social Security Contributions?


Foreigners employed or investing in China need to understand the social security system to stay compliant with China’s labor laws. Implementing the Social Insurance Law issued in October 2011 by the central government required foreigners in China to contribute to social security. Here, Verified GMB Listing Service we’ll take you through everything you need to know about China’s social security system so you can understand how it impacts foreigners working in China.

What’s China’s Social Security System? 

Social security falls under China’s tax treaty that requires residents and foreigners to make some contributions. Foreigners may pay social security taxes in their home countries and at the same time pay social security taxes in the foreign countries. As a result, the foreigners would end up paying double taxation on the same earnings. To avoid such hurting instances, foreigners working in China can benefit from social security taxes or involve professionals such as Moore MS Advisory to guide them.

The social security agreements, also called totalization agreements, help avoid double taxation for people working in foreign countries. The agreement applies where the worker must contribute to the social security taxes in the foreign country and his home country. 

For seamless working relationships, China has agreed with 12 countries concerning social security taxation. These countries include Spain, Japan, Switzerland, Denmark, South Korea, Germany, Netherlands, Canada, Finland, and Luxembourg. France is part of this agreement, but it’s yet to take effect. 

Foreign workers in China should understand the agreement between China and their countries. This will help them understand the labor categories eligible for exemption. They’ll also understand the duration of the exemption. 

The social security system in China comprises five pillars of the Social Insurance Law. They include pension, medical insurance, unemployment insurance, maternity insurance, and work-related injury insurance. The employers and employees pay the first three social insurances, while the employer pays the last two.

How can Foreigners Benefit from Exemptions? 

Foreigners need to go through a process of application to be exempted through their employers. The process involves being issued with certification and verification of the certificate and other documentation. If all documentations are valid, foreigners can enjoy these exemptions. However, foreigners should learn first what’s required throughout the process. In addition, the visitors may seek the services of MS Advisory for guidance on how to go about social security contributions. 

Is Social Security an Obligation for Foreigners in China? 

Whether an employer or an employee, the Social Insurance Law requires foreigners working in China to make social security contributions. However, this law applies differently depending on the region. For instance, foreign employees in Shanghai don’t contribute to this, while those living in Dalian contribute to medical insurance and pension. In the other regions where the law applies, foreigners employed there must participate in the five social insurances. 

Final Thoughts 

Foreigners working in China should comply with the labor law concerning social security taxation. This law will help them avoid double taxation in China and their home country. Foreigners should take their time to understand the totalization agreements between the two countries. When applying for this law, Verified GMB Listing Service foreigners should follow all the procedures and meet every requirement to benefit from the exemptions.