Institute for China Studies

eBook: China Secondment - Tax implications for cross-border labor dispatch

Tags: Publications, eBook, China, Human Resources, Tax, Labor Dispatch

  • Author: Dr. R.A. van Ostende
  • Title: China secondment – Tax implications of cross-border labor dispatch 
  • Language: English
  • Format: PDF
  • Version: 2024
  • Pages: 75
  • Price: EUR 29.95

Along with the development of China’s economy and effects of globalization, an increasing demand for skilled resources in China exists. As a direct result of this, multinational companies with entities in China have been identifying high potentials within their organizations to dispatch them on temporary secondment arrangements to China to assume key technical, management or other positions with the Chinese entity.

In this publication the corporate income tax implications for organizations as well as the Individual income tax implications for secondees are discussed in detail. Attention goes out to the advantages of double taxation agreements may offer organizations, how to handle international taxation and avoid double payment of taxes between the jurisdictions as well as preferential treatments applicable, which have a mitigating effect on tax liabilities is discussed.

Due to the fact that some foreign companies have been providing services to Chinese entity under the guise of secondment arrangement in the past and herewith avoiding taxes, China in recent years has increased focus on secondment arrangements. Means of risk mitigation are discussed as it is imperative that secondment arrangements are well embedded in the organization and proof in regards of substantiating the genuine nature of the secondment arrangement, the non-resident home entity should be well documented.

 The information in this publication aims to provide entrepreneurs with an understanding of China’s perspective of inbound foreign secondment and the local taxation implications it may have, to support their business decision on whether to implement secondment arrangements within their organizations. For foreign employees considering working in China, it aims to provide insight in China’s payroll and taxation system, to support in the decision whether or not to work in China.

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