精英要受money上的打击了:China Considers New Tax for Foreigners

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China Considers New Tax for Foreigners

By JAMES T. AREDDY

SHANGHAI—China may start collecting a new tax from foreign workers and their employers as it extends its social-security program to include the 600,000 foreign nationals who work in the country.

The new tax was referred to in a little-noticed provision in China's Social Insurance Law, published last October and set to take effect July 1, that was highlighted in state media Tuesday. The amounts due will vary by location but foreign nationals working as executives in major cities are expected to face new bills of around $100 a month in exchange for access to retirement benefits and subsidized fees at public hospitals.

Employers of foreign nationals could be on the hook for three times that amount per employee, although analysts aren't sure how rigorously the taxes will be collected.

An article Tuesday in the China Daily, the country's main state-run English-language newspaper, quoted Xu Yanjun, a senior official of the Ministry of Human Resources and Social Security, as saying that "the move will ensure foreign employees in China enjoy the same social insurance benefits as Chinese nationals do."

China is implementing a multiyear, multibillion-dollar effort to build hospitals, restructure pharmaceuticals distribution and improve basic health services to its 1.4 billion people. The point is to modernize a system built in the Communist era where any benefits were provided by the state, but which today is largely pay-as-you-go. The new Social Insurance Law consolidates pension, medical, work-injury, unemployment and maternity insurance programs.

The country has important political and economic reasons to plug holes in its social safety net. Its vast population is aging and anxious about access to basics like health care. Less worry about the future could prompt consumers to spend more of their savings, rather than squirrel it away for emergencies.

If the new social-security taxes are collected aggressively, foreigners are likely to gripe the plan is a grab for their pocketbooks. Many expatriates in China today use international insurance coverage, and few are likely to stay the 15 years required to draw pensions.

But while many foreigners today are short-term residents or top earners with comfortable job packages, analysts say Beijing may be redrawing boundaries in anticipation that as its economy continues to expand it will draw economic migrants who have less to fall back on.

"This is logical in some ways. You work locally, you pay social insurance locally," said Ronan Diot, chairman of the Legal Working Group of the European Union Chamber of Commerce in China. Where it becomes a problem for some expats, he added, is when payment is required for services considered inadequate, such as the level of medical care available in many cities.

The American Chamber of Commerce-China said this wasn't the kind of policy it comments on.

The U.S. is among the nations that requires foreign workers to pay social-security related tax, a system which offers little ability for them to collect if they leave.

Based on what applies to Chinese employees, the cost could be 37% of monthly income charged to employers and 11% for employees, up to a threshold amount set locally, according to Christopher Xing, a China tax partner at KPMG. The charge in Shanghai, for instance, is based on a maximum monthly income of 11,688 yuan, about $1,800, meaning a monthly hit of $666 per worker for employers and $198 for each employee.

Throughout China, taxes are rising, particularly for the wealthy.

"Commentators have treated this as a wealth distribution policy," Mr. Xing said.

The International Monetary Fund, which argues Beijing has scope to reduce taxes overall, has documented a steady climb in its collection. The IMF says China will collect about 18.5% of gross domestic product in taxes this year, compared with 15.6% in 2005.

In its latest annual national rankings of economic freedom, the conservative U.S. think tank Heritage Foundation says China is below average for "fiscal freedom"—though it ranked slightly better than the U.S. The top income tax rate is 45% and the corporate income tax rate is 25%, according to the group.

Exactly how the social security plan will work isn't known, but technically holders of Taiwan, Macau and Hong Kong passports have been subject to similar localization since 2005 but have not generally faced much effort to collect, says Mr. Xing of KPMG.

"The question really comes down to enforcement," Mr. Xing said. "In practice, compliance had been patchy."

More details are likely to emerge in coming months. It isn't unusual for China to fill out regulations only months after a law takes effect.

The process is often further complicated by publication of broad national parameters that are meant to serve as guidelines for rules written more locally, sometimes by city district governments.

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无聊人的意志 发表于 2011-6-5 09:28

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