Tax & Employment Contracts
Employment Contracts
All foreigners and non-Chinese passport holders with a current working visa are not eligible for statutory benefits, so supplementary benefits need to be offered by the employer. Payroll is managed by a third party human resources agency and salaries are paid over 13 months – the 13th month being a bonus month paid during Chinese New Year. It is usual for all employment contracts for Chinese employees to be for a fixed term from 1 year to 3 years.
Taxation
Individual income tax (IIT) is a complex area in Shanghai, with a progressive tax rate reaching a maximum of 45% (although a typical overall tax rate of 15%-25% is most common). Packages for overseas nationals can be structured in such a way as to achieve a more tax efficient salary. Each corporation will have different policies regarding taxable benefits, but it is wise to seek professional advice on this when you secure an offer.
