China’s Ministry of Human Resources and Social Security (MOHRSS) announced in May that China had signed a bilateral social security treaty with Japan.
According to the MOHRSS announcement, Japanese companies operating in China and their Japanese employees posted in China can be exempted from China’s pension contributions. The MOHRSS announcement did not address China’s other four social insurance funds, i.e., medical, unemployment, maternity and work injury. Nonetheless, even if the treaty does not cover the other four social insurance funds, it will still result in savings for these employers and their Japanese employees because the pension exemption would eliminate the highest cost among China’s five social insurance contributions.
The treaty will come into force once both Japan and China have complied with the legally mandated approval procedures in their respective jurisdictions. The full text of the treaty will be made available at that time.
So far, China has reportedly signed bilateral social security totalization treaties with Germany, South Korea, Denmark, Finland, Canada, Switzerland, Netherlands, France, Spain, Luxembourg and Serbia.
Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by e-mailing Danian Zhang (Shanghai) at [email protected]