Foreign companies in China are concerned that a new social security tax on expatriate workers will raise business and living costs and leave payers unable to claim benefits, a survey by the American Chamber of Commerce showed on Wednesday.
It has aroused significant concern among our member companies due to the substantial cost to both employers and employees and the difficulty, or impossibility, of foreigners actually receiving benefits under existing regulations, a statement from the Chamber said.
China announced in July that it would require foreigners to pay into its social security system, effectively instituting a tax on each foreigner's salary. Individuals will pay 10 percent and employers about 30 percent on the first 12,603 yuan ($1,985) of their monthly pay.
The payments cover medical and unemployment insurance and pensions. However the mechanism for tapping benefits is unclear, especially since most foreigners lose their visas to stay in China if they lose their jobs.
So far, the Chinese government has not yet provided details about how foreigners would be able to access services such as unemployment benefits, or if there would be a special visa issued to enable pension claims.
China had said earlier that the new social security tax was aimed at protecting the right of foreign workers in the mainland to benefit from the social security system.
The new tax came into effect on October and the government says it is trying to come up with a solution to outstanding issues as soon as possible.
The effort to include foreigners in the nation-wide scheme will make it more like policies in many EU countries, where citizens and foreigners alike pay into the system.
But foreign executives worry that the government has not yet provided enough details about the scheme.
China's existing social security net offers meagre protection for its own citizens, especially compared with more generous schemes in Europe.