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China to Implement Temporary Reductions in Social Insurance Contribution Rates

The Ministry of Human Resources and Social Security recently issued a circular on the temporary reductions in social insurance contribution rates (Ren She Bu Fa No. 36 [2016]).

According to the circular, from 1 May 2016 the contribution rate to the basic pension fund payable by the employer will be reduced to 20% (of employees' wages) for those employers in the province (autonomous region or municipality) now paying more than 20%. The rate will even be lowered to 19% temporarily if the cumulative balance of the pension fund in the province (autonomous region or municipality) is at least sufficient for the payment of pension benefits for the next nine months and the employers in the locality are now paying 20%. The rates reduction is tentatively scheduled to last for two years.

Further, from 1 May 2016 the contribution rates to the unemployment insurance fund payable by both the employer and the employee will be reduced temporarily to between 1% and 1.5% after lowered by one percentage point in 2015 while the rate applicable to the employee shall not exceed 0.5%. The rates reduction is also tentatively scheduled to last for two years. Implementation details will be announced by the respective provinces (autonomous regions and municipalities).

For details of the circular in Chinese, please refer to Ministry of Human Resources and Social Security’s website:

http://www.mohrss.gov.cn/gkml/xxgk/201604/t20160419_238366.html

Content provided by Picture: HKTDC Research
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