The complexities associated with local employment in China including payroll as well as tax regulations means it is not easy for the foreign employers to grasp the calculation of employee’s salary in the country.
Here we will document some vital factors that are worth considering when calculating the employee’s salary and payroll in China. It’s important to understand these aspects for ensuring tax/payroll compliance in China. You can visit Jscgroups.Com/ for more information on the different aspects of employee salary in China.
Understanding the basic aspects of China payroll
When it comes to the China payroll the salary of the employees is paid on the monthly basis in China. In case there is a rest day or a public holiday, the salary will not be delayed and will have to be paid in advance.
With regards to those employees that are subject to annual salary package or those employees whose salary need to be paid in accordance with assessment period, the employer must pay the salary in advance at standard of nothing less than minimum wage each month and settle the accounts towards the end of year or when the assessment period expires.
In case of full employment the salary of employee should be paid at least once every month. If the employees are involved in part-time employment then the longest payment cycle or the part-time labor should not exceed a period of 15 days.
Understanding the gross monthly salary of the employees
The gross monthly salary of the employees essentially consists of two parts: fixed salary and the variable salary.
The fixed salary is the base salary of the employee that is the fixed amount which is mentioned in contract of employment. The variable salary is the salary amount which will be changed monthly and it includes but is not limited to the bonus, commission, overtime payment and allowances.
The monthly net salary of the employees refers to salary amount which employees can get in cash or within their bank account. The monthly gross salary of the employees refers to the complete monthly salary before the payment of individual income tax as well as contribution to mandatory benefits.
The gross monthly salary of the employees consists of two parts which is the fixed salary and the variable salary.
For social security and mandatory benefits in China according to current law social security is legal responsibility of employer in China. When the employee and employer enter into an employment contract in China, the employer is necessitated by law to pay social security of the employee which includes 1 housing fund base and 5 social insurances.
The 5 social insurances and 1 housing fund includes pension insurance, unemployment insurance, medical insurance, work-related injury insurance, maternity insurance and housing fund.
When it comes to the incomes tax, the employees need to pay the tax on monthly and annual basis from a host of different income avenues including salaries and wages, personal services, royalties, business operations, dividends, bonus and interests amongst other options.
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