Policy #1 - Expat Social Insurance Contributions For Employers in Shanghai

A key government Notice expired in August after 10 years, but no new announcements or statements were made by the Shanghai authorities - suggesting companies will not be required to make social insurance contributions for foreign employees like they are required to everywhere else in China.  

Communications with Shanghai authorities suggest there is no intention to change this practice at this time, and companies are cautiously advised that they can safely continue to not make those contributions if they have not been doing so in the past.  Noting, however, that many companies have started to do so voluntarily over the last 10 years.

Policy #2 - Preferential Tax Policy for Bonuses Continued

At the end of the year, the tax authorities announced that one (bonus) payment per year can be made to employees and the individual income tax calculated at a preferential lower rate compared to the normal IIT rate calculated on monthly salaries.  This is a continuation of existing policy for another 2 years, and applicable not just to expatriate employees.

Policy #3 - Tax Deductible Expenses on Housing and Education

At the very end of the year (Dec 31), the tax authorites announced a 2 year continuation of the favorable policy allowing expats to deduct from taxable income certain housing and school education expenses for their children.  This has been a key benefit many expats have come to rely on, especially given how expensive local international schools are.  The continuation of the policy is seen as a welcoming sign that China continues to encourage international talent and investment in China.

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