Local tax authorities will collect all social insurance contributions

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The General Office of the Communist Party of China Central Committee and the General Office of the State Council recently issued the Reform Plan on Collection and Management of National Tax and Local Tax. According to the plan, starting from 1 January 2019, the local tax authorities will be responsible for collecting all social insurance contributions (i.e., pension, medical insurance, work injury insurance, unemployment insurance and maternity insurance).

According to a 1999 national rule on the collection of social insurance contributions, local governments determined who would be responsible for collecting social insurance contributions. Local governments could assign the responsibility to the local tax authority or the local social insurance authority. The Social Insurance Law, effective as of 2011, did not disturb the local governments’ discretion on this point.

As a result, no uniform government authority is currently responsible for collecting social insurance contributions. In some locations, such as the provinces of Guangdong and Jiangsu, the social insurance contributions are collected by local tax authorities. In other locations, such as Shanghai, the contributions are collected by the local social insurance authorities.

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 danian.zhang@bakermckenzie.com