People’s Republic of China: Totalization Agreement with Korea Could Affect Assignment Costs
A Social Security Treaty (“the Treaty”) has been concluded between the People’s Republic of China (“China”) and the Republic of Korea (“Korea”).1 To benefit from the Treaty, Korean companies should review the social insurance participation of their assignees working in China in a timely manner and arrange to obtain and submit the required documents to the authorities.
The Treaty and Social Security Agreement Protocol (“the Protocol”) expand the scope of social insurance exemptions, and could effectively reduce the cost of social security contributions for multinational corporations and individuals of both countries. As the first signed social security treaty following the implementation of China’s Social Insurance Law, it accelerates resolving the issue of double contributions to social insurance by signing bilateral totalization agreements. The Treaty is expected to further enhance the competitiveness of multinational companies in China.
Footnote:
1 Circular issued by the Ministry of Human Resources and Society Security on the implementation of Social Security Treaty between the People’s Republic of China and the Republic of Korea, Ren She Ting Fa [2012] No. 120. Ren She Ting Fa [2012] No. 120, issued by the Ministry of Human Resources and Society Security on 28 December 2012, states that the Treaty and the Protocol will take effect from 16 January 2013. The China – Korea Provisional Measures of Mutual Exemption on Pension (’the Provisional Measures’), signed on 28 February 2003, is repealed.
Source: KPMG