DOING BUSINESS IN ASIA PACIFIC REGION NEWSLETTER SERIES

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Asia Pacific region is the most dynamic investment destination. If you want to invest in the region but don’t know how, please click the link below to find the information you need. Sox 404 top down risk assessment. This is a series of newsletters: the first issue is “Establish a Business in Asia Pacific Region”, the second issue is “Tax System Snapshot in Asia Pacific Region”, the third issue is “Privileged Tax Policies in Asia Pacific Region”, and the fourth issue is “Hiring People in Asia Pacific Region”. More interesting topics will follow up regularly. Please kindly pay close attention. Thank you.

Establish a Business in Asia Pacific Region

Tax System Snapshot in Asia Pacific Region

Privileged Tax Policies in Asia Pacific Region

Hiring People in Asia Pacific Region

1. WHAT ARE THE SOCIAL WELFARES IN CHINA?

There social welfares comprise pension, injury, unemployment, housing fund, medical insurance, maternity insurance, etc. Except for injury and maternity insurances borne only by employers, all other social welfares should contributed jointly by employers and employees. The portion borne by employees should be withheld by employers and paid to relevant social welfare government bodies on a monthly basis.

Chinese labour law clearly regulated the payment method for employee’s overtime work. Overtime should not exceed three hours per day and 36 hours per month. For the overtime, you need to pay according to following rate.

ü 150% of regular wage for overtime in normal working day

ü 200% of regular wage for work on public holiday, i.e., Saturday and Sunday

ü 300% of regular wage for work on statutory holidays, i.e., May Holiday, National Day Holiday, Spring Festival, etc.

Different companies may have different salary policy and the components or names of the components may differ. Generally speaking, salary shall include basic salary, bonus, overtime pay, allowance and subsidy or other pay for special assignments.

Various social welfares borne by employees should be deducted for individual income tax calculation purpose.

Firstly, you need to understand what your employees really want. If they prefer a higher salary, the option granted to him/her shall not have desired incentive effect.

Secondly, you need to think about to what levels of employees you should grant how many quantities of options. Top management, for example, may prefer more options and therefore larger grants to them may effectively improve your business performance.

Thirdly, you may need to consider when and how your employees can exercise the options since there are difference tax implications depending on when they exercise.

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