Here an update for this topic. It seems they are not really clear about how to handle this in a proper way - big confusion - a lot of back & forth - just like always in China and especially with the AUTHORITIES. This one is from SCMP 22.09.11:
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Adrian Wan
Sep 22, 2011
Beijing may again have to delay a new social security tax on foreign workers on the mainland after local governments complained that they had not been given enough time to implement it, said a person briefed by authorities on the issue.
The person also confirmed that all Chinese nationals from Hong Kong, Macau and Taiwan would be exempted from the new tax, removing anxiety caused by ambiguous wording in a version of the regulation released two weeks ago.
Foreign nationals working on the mainland - even if they are permanent Hong Kong residents - still need to pay the tax, which could be up to 11 per cent of their salaries to a maximum portion of 11,688 yuan (HK$14,266) a month, or 1,300 yuan, the person said.
Employers must also pay - up to 37 per cent of their foreign employees' salaries and also subject to a maximum of 11,688 yuan a month (4,100 yuan), in addition to an employee's own contribution, according to the regulation published by the Ministry of Human Resources and Social Security.
The rules raise questions about whether Hong Kong Chinese professionals will enjoy significant advantages over their expat colleagues as a result. Under the new regulation, it would be more expensive for a Hong Kong company to base a foreign worker on the mainland than to send a Hong Kong Chinese person.
Local governments, including those in Beijing, Shanghai and Guangzhou, have apparently been caught off guard by the new tax - which was scheduled to take effect on October 15, the person said.
"Since different provinces and cities have their own localised version of [tax] regulations, and since some of them are now saying they have just been informed of the new tax, I think it's unlikely that the new tax will be implemented on October 15 as originally planned," the person said.
At the moment, foreigners and Hongkongers working on the mainland can voluntarily pay social security tax to local accounts if they want to receive pension incomes from the mainland after their retirement. The ministry said earlier that the new rule was designed to protect the rights of foreigners so they could benefit from the social security system.
All expats from countries that do not have a bilateral exemption agreement with Beijing will be affected by the new tax. Only Germany and South Korea have agreed to such a deal with China. At least 10 other countries, including the US, Japan and Russia, are still in negotiations with Beijing on such an arrangement.
If an employer is found to have failed to make social security contributions for their foreign employees, they would face a maximum penalty of three times the outstanding contributions. The same penalty will apply to employers who hire foreign workers without a proper work permit.
"Nobody would like to pay an additional 50,000 yuan every year for an expat worker, so it is very good news for Hongkongers [Chinese] working there because they will have a clear cost advantage [over foreigners]," said William Cheung, a partner at Ernst & Young's human capital practice in Beijing.
"The impact on Hong Kong companies may not be huge. Not many of them keep foreign workers on the mainland."
Cheung nevertheless urged Hong Kong employers who have expatriate workers on the mainland to review immediately the implications of the new tax regulation.
adrian.wan@scmp.com Copyright (c) 2011. South China Morning Post Publishers Ltd. All rights reserved.
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So as a clue if whatever will be the result GERMAN & SOUTH KOREAN nationals will be very popular in the future to work in China !
