Terminating Employment in China – Tips for Foreign Workers

Terminating employment in China as a foreigner will not be as simple as it might appear. There are a number of procedures and steps that should be accomplished, whether or not you might be planning on altering jobs in China or leaving the nation altogether. We offer a step-by-step information for international staff to give up their jobs in China and supply recommendation on find out how to declare pension, medical, and housing insurance coverage funds.

2022 has been a difficult yr for foreigners working in China. China’s financial system has skilled ups and downs because the nation grappled with a number of COVID-19 outbreaks and continued geo-political tensions. Some cities have been hard-hit by provide chain disruptions, and plenty of companies have been pressured to regulate their enterprise methods.  

Below these circumstances, expats are additionally reconsidering their profession paths. They could be extra inclined to vary employer, search alternatives in one other metropolis, and even think about leaving China.  

Nonetheless, altering jobs in China or leaving China might not be as simple as many individuals think about, as a result of comparatively strict guidelines for foreigners to work in China. There are a sequence of formalities that you should undergo to proceed working in China legally or go away China with none future issues.  

On this article, we offer a step-by-step information for foreigners who plan to terminate their present employment. 

Cancellation of Foreigner’s Work Allow

If you wish to work in China as a foreigner, you should get hold of a Foreigner’s Work Allow earlier than you can begin work. The Foreigner’s Work Allow can be the primary doc that have to be canceled upon termination of employment.  

Even if you’re merely transferring to a brand new employer in the identical metropolis, you should nonetheless cancel your present Foreigner’s Work Allow so as to apply for a brand new Foreigner’s Work Allow beneath the brand new employer. Usually, the employer handles the cancellation of the Foreigner’s Work Allow.  

The paperwork required to cancel the Foreigner’s Work Allow embody: 

• One unique copy of the Utility Kind for the Cancellation of Foreigner’s Work Allow  
• One unique copy of the certificates of the terminated employment relationship, terminated contract, or different certifying supplies demonstrating the explanations for the cancellation
• Supplementary supplies required by the native authorities 

You will need to cancel the work allow in a well timed method after the employment has been terminated. In our expertise, delays in canceling a piece allow can hinder future purposes for a keep visa, and might even lead to penalties. In case of the applicant’s dying, incapacity, or early termination of the contract or employment relationship, the employer should apply for the cancellation of the work allow to the authority in cost inside 10 working days of the date when the employment relationship was terminated.  

The rationale for the cancellation of the work allow might be included on the cancellation certificates. After acquiring the work allow cancellation certificates, the subsequent step is to cancel the Foreigner’s Residence Allow. 

Cancellation of Foreigner’s Residence Allow

After receiving the cancellation certificates of the Foreigner’s Work Allow, you may make an appointment to cancel your Residence Allow on the entry-exit division of the native public safety bureau. The Residence Allow is a doc that provides foreigners the proper to dwell in China and permits them to journey out and in of China as frequently as they require.  

The paperwork required to cancel the residence allow embody: 

• Utility type for a keep allow 
• Shade photograph and receipt of a China visa {photograph} for foreigners 
• The applicant’s passport 
• The applicant’s Foreigner’s Work Allow  
• Cancellation certificates of the Foreigner’s Work Allow 
• Short-term Residence Registration Kind 
• Paperwork for termination of employment/contract 

It’s essential to submit the paperwork in particular person. The authorities often will challenge you with a 30-day keep visa to present you time to settle private issues. 

Additional actions for foreigners who terminate their employment in China

In case you resolve to go away China and don’t anticipate to pursue future employment in China, you might be additionally suggested to take the next programs of motion. 

Cancellation of Social safety scheme  

Based on Article 5 of the Interim Measures for the Participation in Social Insurance coverage of Foreigners Employed in China, foreigners who go away China earlier than reaching retirement age can have their social insurance coverage private account financial savings paid to them in a lump sum upon their written software to terminate their social insurance coverage participation.  

When terminating your employment and leaving the nation, you possibly can apply to the native social safety bureau during which you might be enrolled to terminate your social insurance coverage participation and settle the quantity in your private social insurance coverage account. The a part of your pension and medical insurance coverage that you just contributed as a person, and a share of your employer’s contribution, is paid into your private account. You’ll be able to then withdraw the steadiness of the private account in a lump sum after your employer has accomplished the required procedures.

Taking Shenzhen for example, the termination of the social insurance coverage relationship might be dealt with on-line. If on-line processing will not be obtainable, you possibly can as an alternative go to your native social safety service workplace with the related supplies for the appliance. After the termination of the social insurance coverage relationship, you possibly can withdraw the steadiness out of your private pension insurance coverage account. After that, your information might be synchronized with the Medical Insurance coverage Bureau, after which you’ll withdraw the steadiness out of your medical insurance coverage private account.  

The paperwork required embody: 

• The applicant’s passport 
• The applicant’s native financial institution card (suggest monetary social safety card) 
• Energy of legal professional (if relevant) 

The precise software process varies from metropolis to metropolis. For extra particulars, please learn our China Briefing article on How Foreigners Can Declare Social Insurance coverage Funds When Leaving China.  

Cancellation of the housing fund scheme 

Though expatriates are typically not required to contribute to the housing fund scheme, some corporations nonetheless contribute to it on behalf of their expatriate workers as an worker profit. Based on Article 24 of Laws on the Housing Provident Fund, workers could withdraw the steadiness of deposits of their housing fund accounts if they’ve determined to settle overseas, amongst different circumstances. After withdrawing the funds, the housing fund account of the worker might be closed. 

In some cities, like Shenzhen and Guangzhou, you possibly can merely go surfing to the official WeChat account of the native Housing Provident Fund Administration Heart. Right here, you simply want to pick out the “Exit Settlement Withdrawal” module, fill within the related info, and submit. The authorities will assessment the appliance on-line. After the appliance has been accepted, you possibly can go to the reservation counter of the housing fund bureau with the related supplies. For cities that shouldn’t have this on-line service, you possibly can as an alternative go to the native housing fund administration middle with software supplies to use for the housing fund withdrawal. 

The paperwork required embody: 

• The applicant’s passport 
• Paperwork for termination of employment/contract, or different supporting paperwork 
• The applicant’s native financial institution card 
• Different paperwork (depending on town’s native insurance policies) 

Particular person earnings tax reconciliation 

When a international worker joins an organization, HR will often pre-assess the variety of days the worker will keep in China all year long to resolve the worker’s tax residence standing. If the precise state of affairs is inconsistent with the pre-assessment, both the employer or the worker must make tax settlements, and might be required to pay extra (or much less) tax, as a change within the tax residence standing will lead to a unique particular person earnings tax (IIT) liabilities.

Overseas workers who’ve resided in China for 183 days or extra inside a tax yr are thought of resident taxpayers, whereas those that have resided in China for lower than 183 days inside a tax yr are non-resident taxpayers. For resident taxpayers, the IIT on their complete earnings – earnings from wages and salaries, remuneration for labor providers, writer’s remuneration, and royalties – is topic to yearly calculation. The taxable earnings quantity of the great earnings of a resident particular person shall be the steadiness after deduction of the usual deduction (RMB 60,000 per yr), in addition to different deductions pursuant to the legislation, from the earnings quantity of every tax yr. The excellent earnings is topic to a progressive tax price of three to 45 p.c, as is proven within the beneath desk: 

For non-resident taxpayers, IIT on completely different incomes is calculated individually for every time or every month once you obtain the earnings. The taxable earnings quantity for earnings from wages and salaries of a non-resident particular person is the steadiness after the deduction of the usual deduction (RMB 5,000 monthly), in addition to different relevant deductions. The IIT charges for non-resident taxpayers are typically equal to these for resident taxpayers. Nonetheless, for the reason that charges are calculated on a month-to-month foundation, they’re primarily based on the next brackets as an alternative: 

Subsequently, if you’re a resident taxpayer in the beginning of the yr however have resided in China for lower than 183 days cumulatively inside a tax yr once you go away China, your IIT will should be re-calculated on a month-to-month foundation. This will likely lead to you needing to pay extra in tax. Conversely, should you have been categorized as a non-resident taxpayer in the beginning of the yr however have resided in China for 183 days or extra cumulatively inside a tax yr once you go away China, your IIT must be re-calculated on the premise of annual complete earnings as nicely. This will likely result in you having to pay much less tax.

If relevant, it’s best to full the annual IIT reconciliation. The interval for annual IIT reconciliation is from March 1 to June 30 of the next yr. Non-resident taxpayers who go away China earlier than March 1 could full the annual IIT reconciliation earlier than their departure. You’ll be able to full annual IIT reconciliation and tax refunds on-line by means of the Particular person Revenue Tax System (which features a cellular app and a web site) or offline by your self. Alternatively, you possibly can entrust knowledgeable service company to do it in your behalf.  

For the reason that information concerned in IIT calculation for foreigners is comparatively sophisticated, it is suggested that you just apply for a QR Code within the IIT system on the native tax workplace and full the registration upfront so you may make IIT changes through the web system if needed. 

The paperwork required embody: 

• The applicant’s passport (for QR Code software) 
• QR Code for the IIT system (apply on the tax bureau) 
• The applicant’s native financial institution card 

Conclusion

As you’ll not have a lot time left within the nation after transferring your residence allow to a keep visa, it is very important plan nicely upfront to make sure sufficient time to finish all the required procedures. As many providers might be dealt with on-line, it’s necessary that you just make the required preparations for the varied processes, reminiscent of preserving a China checking account to obtain any refunds if needed. For help with the procedures talked about on this article, please contact our Dezan Shira & Associates professionals at China@dezshira.com.